5 Common Business Pitfalls and How to Avoid Them
Today, we can confidently say that there are more businesses out there than ever. One reason for this is the fact that, thanks to technology and the amenities that the age of communication brought, starting a business is easier than you would think. However, you must also know that way too many businesses out of those you see spring up every year will actually not make it past their second, let alone fifth year.
About 30% of these ambitious startups are forced to close down before they hit the second year mark, and only about half of them live to see their fifth year. But why is that? Well, there is an endless list of possible reasons for that. There are things out of your control that might cause the end of your business; however, there are also things that you can avoid, only if you were aware of them. Here are several of those mistakes to watch out for.
Money issues
Before you launch your business, you have to make sure you have enough capital – which means you have to do a lot of calculations before you rush to get a loan. You need to have enough capital for your business to run for at least six months, taking into account that the first few months might not see any profit at all. However, what comes after that is avoiding spending both too much and too little. You don’t need to purchase every single piece of equipment right at the launch, but being too stingy will certainly limit your growth potential. Keeping your personal and business finances always separate is also an important step to avoid potential disasters.
Not having a good business plan
In order to achieve your goals, you have to have them in the first place. Running headfirst into a business launch without SMART goals and without a sound business plan is simply irresponsible. If you project possible problems that may arise and devise a plan to overcome them, you can dodge business failure. You need to have both your short-term and long-term goals pinned down, but at the same time, your business plan needs to be flexible to accommodate changes you might or might not expect.
Not doing ample research
In order for your business to succeed, knowing your customers and the local market is of the essence. Opening up shop where the market is already oversaturated with the same kind of businesses as yours is a surefire way to failure, but the same goes for missing crucial things about your demographic. You have to create the exact customer profile your product is for and base your business in an area where that demographic thrives. All of this means that you have to do extensive market research before you launch.
Trying to do everything yourself
Staff issues are more common with inexperienced businesses than you would expect. First of all, you need to understand that you (or your small team) cannot possibly do everything by yourself. There will come a point where the workload and the complexity will not allow it, not even if you drag your family members into helping out (which is, by the way, another thing you should definitely avoid). Outsourcing tasks that need professional attention (such as marketing) will pay off as you can rest assured the job will be done properly while, at the same time, you will have more time on your hands. Not tapping into a diverse talent pool is also a waste, especially when there are services such as Provider Rego that facilitate NDIS registration so that you can employ people with disabilities and explore a new workforce.
Tough competition
With so many businesses around, the competition is really tough – there’s no doubt about that. If you’ve done the research stage right, you have minimized this problem to a degree; but even when you find that market gap, chances are others are already there, trying to fill it. The only way to overcome the competition is to find your unique selling point, and base your marketing around that. What makes you different from other, similar brands? Think about this, because if you do the exact same thing as others, the competition will not spare your business.
Launching a business might be easy, but keeping it afloat is certainly a complex challenge. There are a lot of moving parts that might go wrong, starting with those that we just described. While that’s certainly not the end of the list, make sure that you always keep these in mind and your new business will be thankful for it.
