Every new business seeking to establish itself is constantly reminded of the fact that 90% of start-ups fail, and that the odds are simply not in their favor. It’s enough to put any investor off and has also made a few aspiring entrepreneurs more than a little apprehensive.
The good news, however, is that a large number of those start-ups do something catastrophically wrong in their first few months, sealing their fate long before they’ve had time to file their first year’s taxes.
As an entrepreneur seeking to become part of the 10% instead of the 90%, you need to make sure you avoid these common mistakes that small businesses make.
1.Moving Too Quickly
The trick is to put that excitement to one side and start thinking with your head, not your heart. The more time you give a new business to develop, the better prepared you will be to face inevitable issues down the line.
Starting a new business is exciting. Your head is full of ideas and you’re eager to put them into action and start chasing those goals. The problem is, rushing in like this can leave you unprepared to deal with problems and when those problems arise they can cripple your fledgling business.
2. Not Planning
More time could also lead to better funding and a better understanding of your market and competitors.
Every facet of a business needs to be planned from the first step until the last. That doesn’t just mean that you should piece together a hastily written business plan—you need a detailed business plan, marketing plan, and financial plan.
Write down your goals and the realistic ways in which they can be achieved, and ensure that every step of the journey is carefully plotted. It can be fun to go in blind and make it up as you can along, but not when your capital and livelihood is on the line.
3. Blowing the Budget on Unnecessary Expenses
There is money to be saved and lost in every area of your business and in some cases a little careful consideration in this regard can literally be the difference between success and failure.
Take business property as an example. A small business that plans to hire a handful of employees may think it’s wise to rent a city-centre office. They may even budget for the $50,000+ rent and think they can afford it. But that office needs furniture, equipment, kitchen appliances, care-taking staff, and occasional maintenance, and it also requires a long-term commitment.
It could cost a small business $80,000 in their first year, whereas a shared office, such as those provided by Deskhub California, cost just a couple hundred dollars a month and don’t require any long-term commitment.
4. Undervaluing Products and Services
Retail start-ups have a tendency to undervalue their products, either because they are so desperate to beat their competitors or because they are so scared to fail. But this greatly reduces the bottom line and means there is a much smaller margin for error. It also sets a dangerous precedent, as customers will come to expect those low prices.
The trick is to set your price high to begin with and then use coupons and promos to bring it down. If you discover that there is a significant sales increase during one of these promos and it greatly benefits your bottom line, consider making those prices permanent.
5. Using the Wrong Marketing Platform
There are many marketing platforms out there and while they all provide some benefit, they won’t work for all businesses. The problem is, many start-ups don’t realize this. They sink their money into a platform that doesn’t work for them and because they’re focusing 100% on that platform and don’t have anything to compare it to, they think that the measly ROI they’re experiencing is normal.
This is true for many start-ups that focus their attention on Facebook Ads, which actually offers a very poor ROI for retail websites when compared to Google Ads. It’s also true for PR firms that charge an extortionate amount of money and don’t deliver on what they promise.
If you don’t have a marketing plan that has already covered the many platforms and their pros/cons extensively, then spend small amounts of money on all of them, find the one that works best, and focus your attention on that in the future.