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10 Common Mistakes Start Up Businesses Make
Robert Warlow
Small Business Success
Unfortunately
very few start up businesses make it beyond their 3rd year.
Failure is usually down to a number of clearly identifiable mistakes, which
if small business owners are aware of, can increase their chances of
survival.
Here are the
top 10 common mistakes which small businesses tend to make.
1. Lack of Market
Research
When a
budding entrepreneur comes up with an idea for a new business he assumes
that because he would buy such a product or service then everyone else will.
This may be the case for day-to-day necessities but for other items this is
usually not so.
It's
important that when you start up you carefully research the market to check
that:
-
There is demand at a level
which would lead to a sustainable business
-
People are prepared to pay
the price required for you to make a decent profit
Undertaking market research may appear time consuming but the effort will
pay off.
2.
Poor Record Keeping
Some
business people are not born administrators; they feel more comfortable
getting out there and 'doing the business'. Paperwork is too easy to ignore
but can never be put off indefinitely.
Sales,
purchases and other expenditure must be carefully documented, so you know
whether you are making a profit or not. Invoices must be issued on time and
chased up promptly if there is a delay in payment. It's all very well having
the sales but poor record keeping can hold you back.
Having
your paperwork in order will also save you time when it comes to your
accountant doing your year-end books!
3. Insufficient
Capital
When
starting off it's easy to decide what capital is required for fixtures and
fittings, machinery and stock. What many new business owners forget about is
the cash needed to fund day-to-day requirements, i.e. cash to pay expenses
before your customers pay you. This is known as your working capital
requirement.
Small
businesses can fail because they have insufficient cash to start off to meet
these immediate expenses. If you wish to survive make sure you set aside
enough cash to meet all your needs for the first few months.
4.
Ineffective Marketing Or None At All
You
cannot afford to treat the cost of marketing as an unnecessary expense. A
business with no marketing is like waving in the dark - you know you are
doing it but no one else does!
There
are many ways to promote your business on a small budget; it's just a case
of being inventive and creative. What ever you do, don't assume that people
will quickly know you are in business - they won't, unless you tell them.
Ign 5. Ingoring Changes In The Market Place
As a
small business owner it's very easy to get immersed in your business and not
see what is happening around you in the market place. Always keep your eyes
and ears open to what the competition is doing and what your customers want.
Don't get left behind.
6.
6. Owner's Attitude
Attitude is everything in business. Don't forget that the real boss in your
business is the customer. Running a business may make you feel important but
don't let this develop into an "I am better than you" attitude. Do this and
you will quickly chase your customers away.
7.
7. Spending On The Wrong Things
Being
in business can be exciting, especially as the cash starts to roll in!
However, don't be tempted to spend it on a new car, a house or just a good
time. If you are to own a successful business then you have to keep some
cash back to fund future growth. A business cannot grow without cash, so
commit to spending business money on the business.
8.
8. Dependent On A Small Number Of Customers
Don't
fall into the trap of setting up a business just because one person says
they will buy from you every week or month. Setting up and running a
business, which is dependent on one customer, is not a recipe for success.
What happens if, one month after you have spent all your cash to set up your
business, that customer says he has changed his mind and has decided to buy
elsewhere? Unless you can find other customers very quickly you are faced
with closure.
Before
embarking on a new venture make sure you have a sufficient number of
customers such that if a few go elsewhere you can still continue trading.
9.
9. Growing Too Quickly
Surprisingly, growing too quickly can be a problem. You have to be
disciplined enough to only take on work you can handle. If you are tempted
to accept too much you could end up disappointing not only the new client
but also your existing ones.
Also,
don't under-estimate the impact rapid growth can have your administrative
burden. As I mentioned earlier, getting behind on the paperwork can have an
equally damaging effect on your business.
10.
10. Trying To Do Everything
Finally, the problem most small business owners have is the fact that
everything falls on their plate. Inevitably this is how it's likely to be in
the beginning, when the limited budget means that staff are a luxury, but as
the business grows be aware that you cannot continue to do all tasks. There
will come a point when you become inefficient and not have enough time to
complete everything in sufficient detail. Taking on an extra pair of hands
will increase your costs but you will be surprised at how much time will be
saved, allowing you to do what you do best - getting the business in.
Take a look at each of the mistakes and make sure that you don’t fall into
these traps.
©
Robert Warlow
Small Business Success
www.smallbusinesssuccess.biz
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