For small businesses, there is a very slim margin for error. For every successful venture, there is an equal number of enterprises that crashed and burned. As much as 50% of small businesses will fail in their first year. Another one-third might not survive their second year.
To help you become one of the ventures that succeeds, let’s have a run-down of the most common, but most deadly offenses for entrepreneurs:
Before deciding which products to offer, perform your due diligence of careful research and market study. The most important question to ask at this point is: Is there a demand for the item? Then on to supply: Is there room for one more player in the market?
Huge demand is awesome, but ensure that the market is not overly saturated yet. You can still choose to muscle your way into a saturated market, but make sure you have a strong marketing plan to back you up.
Related to the first point, your potential product’s demand can make or break you. Sometimes, people offer products that no one wants to buy. Right product might sound like a no-brainer, but offering the wrong items actually happens more often than you expect.
Next, check your portfolio of items. Too much assortment can eat up your capital. Too limited and it can hamper your growth. Regularly reviewing your product lines can save you a lot of headache. Establish the correct inventory needed before you stock up or replenish.
You might be excited to get your business off and running that you would rather start selling than sit down and formulate a long and detailed business plan. Wrong move.
I cannot stress enough the importance of planning. As cliche as it sounds, “If you fail to plan, you plan to fail.” Your plan is your blueprint for your business using the 7 P’s Formula: product, price, place, promotion, packaging, positioning and people. Establish budget and assign responsibilities for each P. You must not only start with a relevant and actionable business plan, but you must revisit it often as needs and trends change rapidly. Do not hesitate to consult with experienced business people, if you must.
Another common mistake is assuming that since you have a good product and you know that there is a demand for it, that customers will come to you. You think there is no need to spend for marketing / promotional efforts.
The bottom line is: a product that is not visible will not get noticed. At this age, there are so many effective and affordable options to choose from: your own website, using a third-party e-commerce website, social media platforms, search engine optimization and marketing. The digital world is the new word-of-mouth: utilize it.
Begin with the end in mind- another cliche that is very true. When asked what their working objectives are, some small business owners just shrug and say, “As long as we are profitable.” or “We just want to sell more versus last year.”
If you are apathetic on where you want your business to go, that might cause you or your team to be lazy. If you are too idealistic, that might cause your organization members to be demoralized and discouraged.
Establish SMART monthly, annual and long-term goals and track them regularly. SMART stands for: Specific, Measurable, Achievable, Relevant, Time-Bound.
Small businesses have limited resources and manpower. Add in inefficiencies to the equation and you end up with the bare minimum. It is of utmost importance to use your resources wisely.
Inefficiencies are very costly- you waste precious time and stress on them. A powerful and easy-to-follow system is the backbone of any business- it helps your company run with less intervention from you. It helps maximize opportunities and solve problems faster. It prepares your organization for bigger scales of operations.
Are you investing in the right things? Do you shell out your limited capital on fixed costs that negatively affect your company’s liquidity?
Some examples of assets that might turn out to be liabilities are: expensive and inflexible office lease or rental terms, miscalculated inventory, unnecessary equipment and wrong technology.
Focus on value-adding investment: quality website and marketing venues, useful competitive information, the right location and workplace, optimal inventory and needed expertise are some examples.
Invest in your workforce! This is so important that we discuss more of that in the next point.
Your team is your lifeblood. However, due to financial constraints, some business owners choose to hire substandard employees. It might be hard to put it on exact numbers, but hiring the wrong people is very, very costly for a small business. At the end of the day, you get what you pay for.
If you are bullish about your company’s growth, build a team that can grow with it. It is mandatory that every member is high-performing and can catch up with a rapidly-changing environment.
Training people with limited capacity or worse, replacing them, will eat up your organization’s bottomline. Dealing with low morale due to wrong job fit can dwindle your entire team’s motivation.
Outsource some functions, in case you cannot afford to keep someone full-time. Consider these expertise: bookkeeping and tax help (this can save you thousands of dollars every year), administrative and operational assistance (to help free up your time for more important tasks), coaching (an experienced person’s knowledge and contacts are extremely valuable).
Avoid these eight potentially deadly mistakes and tip your business to the right side of the spectrum: be part of the success statistics!
This list of common mistakes to watch out for was brought to you by the friendly folks over at www.findmyworkspace.com
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