It always saddens to see or hear of small businesses folding, but when they close down within a year or two of opening, it’s especially sad. And so many times this happens, it’s for the same basic reason; someone has started the wrong business in the wrong place at the wrong time.
If you want to start a business, read through the following list of business mistakes and take them to heart.
When you’re starting a business, the top 10 mistakes are:
1) Not doing a business plan.
If one had just fifty cents for every time someone asked “Is this a good business idea?” over the years, he’d be wealthy. You will never know, unless you write a business plan.
2) Doing what you love.
It sounds fine in theory, but the reality is there’s a whole lot of people out there who love things they’re not good at. Advice? Don’t do what you love; do what you’re good at and what people will pay you (well) for.
3) Not doing any market research.
Test your products and service first before you start a business. If you don’t, you have no idea if people are even going to want to buy them. You may think you make the tastiest pierogi in all the world. But will anyone else? Learn who to Do Your Own Market Research.
4) Ignoring the competition.
Ignoring the competition won’t make it go away – and can be fatal to your new business. Simple question #1: If you’re selling your thingamabobs for $10 apiece and Vera down the street is selling her thingamabobs for $6 apiece, how many thingamabobs are you going to sell?
And what if Vera’s thingamabobs look/smell/feel/taste better than yours? 6 Ways to Find Out What the Competition is Up To will show you how to keep tabs on the competition that matters.
5) Not taking into account your own strengths and weaknesses.
Unfortunately, sometimes our strengths or weaknesses don’t fit well with the business model we want to use, leading to disastrous results. For example, if you’re not a friendly, outgoing type of person with good people skills, retail is not for you.
6) Not understanding what you’re actually selling.
Helena Rubinstein, the first self-made female millionaire, didn’t become rich selling face cream; she became rich selling beauty. If your new business is going to be successful, you need to know what you’re actually selling and craft your Unique Selling Proposition accordingly.
7) Not making sure you have enough money.
Ninety-five percent of businesses will not make money when they first open and a large proportion of new businesses will not make significant money for years.
Which means you (and your family) have to have enough money to live on while your new business is getting established, as well as enough money for the business to survive and grow. See The Two Main Problems of Starting a Small Business for a discussion of possible solutions to this dilemma.
8) Not investing in marketing.
“Build it and they will come” – another of those popular sayings that doesn’t actually work. Come where? Why? Or even when? No one will know without some effective marketing. How to Create an Effective Sales and Marketing Strategy explains the basics.
9) Not bothering with any online marketing.
One way or another, your small business has to be online. You may or may not need a website (many individuals who provide services use other “homes” on the Web, such as Facebook or LinkedIn pages) but your business needs to be able to be found by and promoted to the ever increasing number of people who use the Web to find the products and services they want.
Actively marketing your small business online is even better and will give it a far better chance of reaching your customers. One possibility is to engage customers through social media. Learn How to Create a Social Media Plan.
10) Trying to do everything yourself.
Running a small business, even if it’s a one person business, involves so many different tasks that no one person can do them all well. So do yourself a favour and increase the chance of your new business succeeding by getting the help you need from the get-go. Learn How to Delegate, hire and outsource to make the most of your skills and benefit from outside expertise. For example, do you really need to do your own accounting?
Who Doesn’t Want to Succeed?
If starting a business is in your future, understand that starting a business is a process, not an event. If you take the time to do the thinking and the research and get your ducks lined up in a row, you’ll hugely increase the likelihood of your new business succeeding.
However to make a good choice when it comes to choosing the right business insurance, the GoodWill Financial team is always there to help you out!