Do you have a hobby you know could profit as business? Maybe you have a great money-making idea and the time to nurture it. In any case, you're moving towards starting your own business.
The truth is, you're just a tiny bit nervous. But who could blame you? We've all cringed at the statistic that one in five businesses fail in the first three years. That's enough to give any entrepreneur pause.
So, how can you ensure your business won't go from fledgling to failure? Knowing common start-up business pitfalls is the first step to avoiding them. Learn from your predecessors to side-step their errors and march to success.
Safeguards: Understand Your Market
Safeguard your success by assessing the market for your product or service. In business, the field of dreams "build it and they will come" philosophy doesn't work. Just because you would buy something actually doesn't mean anyone else will. Instead, conduct the research that will tell you the larger public hungers for your product or service. Then, build it.
Understanding the market doesn't necessarily mean hiring a market research company. A web search can yield quite a bit of information about whether or not there is a need for your product or service. Aside from seeing if there's a demand for your product, you want to make sure you can charge enough to make a profit after expenses.
Put it on Paper: Writing a Business Plan
No matter how dry or pointless it may seem, writing a business plan is critical. New business owners often opt out of this step simply because it feels too abstract and it's intimidating. One simple way to get started is by surfing the web. There are lots of great models to adapt for your own business plan. Think of your business plan as a chance to document your hopes. Simply committing plans to paper will give you a refined sense of the scope of your undertaking.
A well-done business plan outlines everything from goals and objectives to financing and target markets. A business plan is both a roadmap and a construction zone. That's because it's a guide you'll refine as your business grows. Business cases are useful for attracting investors and increasing your credibility since they document your business forethought and research. Plus, many business owners find writing a business plan actually motivates them to turn paper plans into a bricks and mortar reality.
Marketing: On Your Daily To Do List
Remember, no one will know about your business unless you market it. You need to advertise and sell the benefits of your product or service to the purchasing public. Emphasize what makes your business stand out whether it's superior customer service or convenience. From taking out an ad in a trade magazine to placing flyers on cars, there are endless ways to market your business. Make sure your advertising is strategically placed for visibility to the broadest range of customers. And never miss an opportunity to promote your business at social or business functions.
Never underestimate the power of word of mouth. Make your customers your advocates, not enemies. After all, word of mouth can be a double-edged sword, so aim for five-star customer service. Ideally, every customer should generate new sales through referrals.
One new business pitfall is simply letting marketing efforts fade once a business is established. Marketing complacency is a huge danger. You must continually bolster your customer base, not just rely on existing customers. As your business thrives, consider new ways to interact with and entice both new and existing customers. Think about e-newsletters, discounts for repeat customers or starting a blog.
Record Keeping and Revenue Saving
Accounting catches many new business owners off-guard. Entrepreneurs tend to focus on their business ideas. Don't let "the books" get left behind or commingle business and personal funds. These temporary conveniences increase your long-term risk of an audit.
The upside of diligent recordkeeping? You'll be able to watch your profits mushroom - a satisfying reward for any new business owner. Consulting an accountant to make sure finances stay in the clear is a first step for many start-up owners.
From One-Person Show to...
As a new business owner, you'll probably be juggling all aspects of your new business. Being your own boss could mean everything from answering phones to shipping final packages to marketing to record keeping. For start-ups, expenses often initially exceed revenues, so it's crucial not to overspend on hiring others.
A longer term consideration is that start-up business owners often have a hard time delegating as a business grows. Turning over control naturally feels risky when you've nursed your company's growth. Make sure your new hires feel invested in the business and want to strive for continued success. As an owner, you'll ultimately best serve your company's growth by focusing on a broader scope. Cultivating new business may take priority over the day to day running of the business.
You don't have to assume the personality of a bulldog to be a business success story. But persistence and endurance are critical. In today's customer centered world, flexibility is necessary. A willingness to accommodate customers is one variable you can swing to your favor to help determine your success.
Get Started Now!
It's a cliché that there are no guarantees in life. But that doesn't mean there aren't ways to reduce obvious risks. Whether it's chatting with your accountant or delving into that business plan you've been avoiding, get out there and do it. Now that you know some common pitfalls, turn your start-up into a statistical success.