Much like parenting, there’s no magic guide for establishing and building a successful business.
Most new business owners take what knowledge they already have, seek information and advice from others they trust, combine that with a fair degree of gut feel and then cross their fingers and hope it will all work out fine.
Despite their best intensions, there are a few common mistakes many start-ups make, often through complacency and lack of forethought.
Being aware of them might help you to avoid making those same mistakes yourself.
1. Not having a clear purpose
Many business owners aren’t able to clearly articulate why they are in business and what they are trying to achieve. Having a clear vision for this will keep you focused and drive your efforts, as well as give your staff and customers a clear indication of what you’re about and identify with how that relates to them.
2. Believing you don’t have any competition
There are few truly unique new ideas for products and services and many business owners fail to see this. Even if you have a unique feature to sell, it still doesn’t exclude you from having competitors. Your competition is anything that competes for your target market’s dollar.
That could be direct competitors selling a similar product or service; indirect competitors that provide an alternative substitute that helps to achieve a similar outcome; as well as completely unrelated purchases that your customers could choose to spend their cash on instead of buying from you.
Think about your competitors and how you’ll be heard and chosen above them.
3. No sustainable competitive advantage
When you’re up against the competition, having a sustainable competitive advantage that you can use to distinguish yourself is important. How you distinguish yourself could be based on price, value or by tailoring your offer to a niche market.
Once you’ve determined your sustainable competitive advantage you can use it in the short term to obtain staff and customers, and in the long term to drive business value.
4. Running out of cash
Many start-ups get caught out by not properly understanding the cashflow of the business and the cash required to fund growth.
As a result, they generally don’t have enough cash when they need it. To counter this, you need to plan ahead and have a cashflow forecast and budget which should be updated frequently to reflect your actual position and immediate upcoming needs.
This allows you to ensure you can meet any large commitments, including those relating to tax payable, which are often forgotten in planning stages; make decisions; and better plan for any growth activities.
5. Accepting any customers’ business
It’s tempting to accept any business when you’re a start-up hungry for sales and revenue. The downside to this is you could find yourself with a lot of painful, poor paying customers that take up time, drain profits and take the joy out of your workday dealing with them.
Better to define an ideal customer and target market that is likely to provide multiple sale opportunities, make buying decisions in a suitable manner and require a level of pre-purchase education and post-sale care that match what you can and want to deliver.
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