Starting a business is a big undertaking and should only be attempted after careful consideration. Whether it is a retail store, an Internet business or a local service company, there are certain mistakes that can doom any business. By knowing what these mistakes are, your excellent business idea will hopefully avoid the minefield of obstacles to success.
Mistakes Businesses Make
Insufficient Planning Will Kill a Business before It Has a Chance
Every business requires an overall business plan that lays out how you will bring your business from launch to success. Within this plan you will, at a least, also need a economic plan and a marketing plan. You will need to have the businesses financing worked out so that it will survive long enough to start generating enough income to become self-sufficient.
Then this financial plan will have to be periodically updated to mirror the operating realities of where you need to be spending the money coming in. The marketing plan covers how you intend to market your product or service. Figuring out how to properly promote your business is too important to “wing it” and doing so will doom it for sure.
Incorrectly Pricing Your Products or Services
Calculating a price for your goods or services that is high enough to enable you to cover your costs and yet low enough to get people to buy from you is an important skill to master. Deciding on what price to charge for one’s goods or services should be in a good business plan.
Nevertheless, prices will change over time, so a good entrepreneur needs to keep one eye on fluctuating costs from suppliers and the other eye on what competitors are charging. Not realizing that pricing is fluid over time and needs to be adjusted periodically will be a fatal flaw for any business as you will either not be covering your expenditures if you’re undercharging, or your customers will flee to competitors if you are overcharging.
Trying to Do too Much Yourself and Failing to Build a Good Team
All of us have strengths and weaknesses. It is important to take stock of what they are. When finding others to collaborate with in a project, you need to find people whose skill sets complement you where you are weak. Too many people start a company with friends or associates from previous work without sufficient regard to what each person brings to the table in terms of expertise, schooling, and capabilities.
Not Protecting Their Investment
In the case of a retail business or one with product in a warehouse, you need to protect your investment. Security firms help a business owner protect the significant investment they have made in plant, product or equipment. Security alarms, access control systems and similar security monitoring systems are a small price to pay compared to losing all that you’re building in a fire or to theft or vandalism.
Failing to Properly Handle Growth.
Your start-up is taking off, orders are coming in, and you are so busy you are having to hire new employees to help you expand. As wonderful as this seems, this is where a lot of companies blow it and go under. Make sure to keep tight reigns on expenditures through any initial wild growth phase.
When the money starts flowing in, it can seem easy to get a little lax about how it’s spent. Don’t make this error, and you may ride your expansion to explosive success.
Starting a new business can be an adventure, but it is also rife with risks. Hopefully you will learn to avoid some of the greater ones, and ride your new entrepreneurial dream to the top.