Whether you’re thinking of starting a business or you’ve recently started one, you can expect setbacks. They are inevitable. However, it’s best to learn from the mistakes of other founders of small businesses. To prepare yourself for the challenges ahead, here are seven mistakes to avoid when starting a business.
1. Overlooking the Importance of a Business Plan
Brilliant ideas and the thrill of newfound motivation won’t get you very far when it comes to putting a business together. Getting your ideas out of your head and on paper is a crucial first step for a successful business launch. Having a business plan forces you to review every angle of your business idea, from your value proposition and marketing assumptions, to operational and financial planning. (For related reading, see: 8 Steps to Becoming Your Own Boss.)
2. Ignoring Your Market
When starting up a new business, you need to be sure there’s a market for what you’re offering. Imagine devoting your time and money into your new business only to find out people aren’t interested in what you have to offer. While it may seem complex, understanding what your market is and why it’s important will eliminate confusion and set your business up for long-term success. Here are a few questions to consider when determining your market: Who are your primary competitors? How long have they been in business? What are these businesses doing well? What is the price point other businesses charge for a similar product or service that you’re offering? Where are your key prospects?
3. Discounting the Desires of Your Target Audience
It’s not enough that you think your business idea is great. Your customers have to think so too. To succeed in your new business, you have to invest in your target audience and, just like your market, get to know them like the back of your hand. Discounting their desires will put you on the fast-track to failure. But if you understand what they’re looking for, you’ll gain their trust and unlock the secret to converting them from prospect to customer.
4. Insufficient Funding
Starting a business without sufficient operating capital is only asking for trouble. It is cited as one of the top 10 reasons that small businesses fail. While many new business owners underestimate the extreme perils of riding the cash flow roller coaster, it’s vital to ascertain how much money you will need to fund startup costs and keep the business running for the first year or two. Now is a great time to sit down with your financial advisor and get their expertise on securing ample funding for startup capital. (For more, see: Six Steps to a Better Business Budget.)
5. Skimping on Marketing and Advertising
Once you understand your market and get to know your target audience, you have to spread the word about your new business to attract interest if you ever hope to turn a profit. While it doesn’t have to be huge, your business must have a marketing and advertising budget. As you generate revenue, you can expand your budget in this area and focus on better, and more targeted, strategies to grow your business.
6. Lacking Flexibility
With all the time and money invested into planning your business, the idea of changing paths isn’t an easy consideration to undertake. However, the most successful business owners understand the importance of remaining flexible in their business. With every new business, the market changes just a little. Not to mention the needs and wants of your customers changes all the time. It may be challenging to change course but it’s better to be flexible than go out of business.
7. Ignoring Advice
It’s easy to think your business idea is as solid as they come and that you are destined for success. No matter your level of preparation, mistakes will happen. Regardless of your experience and knowledge, there is always something to be learned from others. Work with a mentor in your niche to gain insight and guidance, and meet regularly with your financial advisor to stay on track and reach your financial goals.
Business owners are often overwhelmed with decisions on a daily basis. When it comes to mapping out the steps you should take, there are as many opportunities to make bad decisions as there are good. From the very first time you contemplate starting a business to running the day-to-day operations, it’s important to know which mistakes have plagued others before you. By avoiding one or more costly mistakes, you’ll find yourself in a better position to achieve long-term success. (For more from this author, see: How Small Business Owners Can Create Cash Flow.)