Starting a new business is tough. You are bound to make mistakes – that is a given. But how do you minimize the mistakes that could kill your business overall? In this post, we are going to look at that issue.
And, no, this is not going to be another lecture on how you need to do your research upfront. You probably already know that. According to Statista, around 42% of startups will fail because there is no need for their product in the market.
It is a sobering fact, but also one that gets a lot of play-time. For the purposes of this post, we are going to assume that you are in the contingent that has the right product. Let’s see what other mistakes you want to avoid.
There is one big mistake that business owners are prone to make, especially when it comes to higher-end items. Marking the prices low to get a foot in the door. At first, this seems like a smart strategy, but it is not going to work out for you.
At some point, you will need to increase the prices so that you can make a decent profit, or it won’t be worth the effort. Clients are not going to understand about this, and you are bound to lose custom as a result.
Instead of trying to compete in terms of price from the get-go, rather create value for your clients. Let them see that you value your product, and they will learn to value it as well.
If you are in the service industry, be wary of doing too many favors for clients. We do all want to go the extra mile for our customers, but it can be problematic in that they start to devalue your services overall.
Choosing the Wrong People
You and your best friend have decided to start a business together. It is great – he has the ideas and you know how to get the work done. Chances are that your business is not going to last all that long.
In the bootstrap stages, the idea guy has to muck in and help out as well, and if he does not, it won’t be long before resentment builds.
You need to partner with people who have similar goals and aspirations to yourself. You need to have similar working styles so that you can stay on the same page. The above arrangement is just one small example of how things can go very wrong.
Ignoring Your Gut
There are going to be times where your instincts mislead you, but that is not very often. Do educate yourself about every aspect of the business that you can. The better you understand your business and your market, the more accurate your gut feelings become.
At the very least, listen to your instincts when they are warning you. If you head says, “Yes” but your instincts are screaming, “No” do more research.
Not Sales-Focused Enough
It is easy in the beginning to get caught up in the little things. Like finding the perfect color ribbon to match the label. Or fussing over small details before we finally get through to the launch.
It is good to be detail-oriented, but you do have to remember one thing – you need to make sales to survive. Focus first on establishing an inbound funnel, so that you have a consistent source of leads coming in. The product need not be perfect yet, but you do need clients.
Inadequate Startup Capital
You can start operating on a shoestring, but this seldom works out well. You can go to comparison sites and get the best rates for shipping, supplies, etc. but you must have money to run the business.
If you are waiting to sell stock so that you can buy more supplies, your business has already started to stagnate. Raise the funding beforehand and avoid this happening to you.
The kiss of death for a small business is to promise something that they cannot deliver. You may be desperate to get that big order; you may tell yourself that somehow you will find a way to deliver on time but being realistic is a far better strategy.
Consider the costs of failing to deliver what you promised, or running yourself ragged in order to deliver. At some point, you have to say, “No.” Do it before you mess up the relationship.
That is all – the six most common mistakes when starting a business. Avoid these, and you have a far better chance of success.