Starting out on your own is a big move and a very exciting time in your life, there is a lot to consider and it can be daunting and somewhat overwhelming. Many mistakes can be made that will undermine or destroy the new business, so it’s important to learn from other people’s mistakes. These 6 pitfalls are not the only issues to contend with but tend to be the most influential to a start-up business.
1.) Not understanding what you are selling
It sounds obvious but one of the main reasons for early stage business failures is not being crystal clear about what you are selling, and really understanding your market and target customers. You are providing a solution to a problem they have so ensure you know what it is and then tailor your solution to fix their problem. It’s always useful to put together a marketing plan right at the start as this will then form one of the key parts of your business plan.
2.) Waiting for the phone to ring
This is another mistake business owners frequently make, potential customers need to know of you, so join some networking groups and get yourself out there. If you want to be profitable, your customers need to be able to find you easily and know that you exist. Be everywhere that your customers might look for you via brochures or signs. It’s essential now that your marketing plan includes the use of social media platforms like LinkedIn and Twitter. As you grow your network, your contacts will become your extended sales team helping to promote what you do.
3.) Trying to go solo
Successful entrepreneurs like Richard Branson, for example, didn’t get to where they are today on their own – they surrounded themselves with good people who have the skills they don’t have. Consider who you will need in your “team me” – the people you will require to get started in business who will be your support team. That might include an accountant or business advisor, and should certainly contain family and friends. You must have these people in place before you actually need them.
4.) Thinking you know it all
Recognise your weaknesses and recruit people where required or look at ways to turn your weaknesses into strengths where possible. Get any training you need to help you to get started and to manage and market your business. Try and find some cheap or free courses to develop your skills and create a continuous personal development plan so that you can always be up to speed with what is going on in your market. As soon as the cashflow will allow it, contract out the functions that are not your expertise, to experts who will make a better job of it. This might include the accounts, social media or telesales.
5.) No monthly profit & loss and cashflow
Not having a robust financial plan is probably the number one reason for business failures. Very few business actually make any money in the first year maybe even two in the current economic climate so when putting together the financial budget part of the business plan, overestimate the cash required to not only start the business but also the amount required to stay in business for the first couple of years, and that would include money for you to live on. To have a sustainable business, much of the money that you make in the first few years will need to be re-invested in the business. Try to overestimate how long you think it will take to become profitable, overestimate the costs and expenses and underestimate what you anticipate your income to be.
6.) Inadequate planning and preparation
Although the drive and enthusiasm is there, don’t rush into starting the business. Ideally you should give yourself several months to consider if it’s the right thing to do and the right time. Do you have the drive to push yourself (nobody else can do it for you) and can you survive with erratic income, because that’s how it will be in the early days? You must create a great business plan containing your vision, mission, long and short term objectives, strategies and action plans. Anticipate change as well as growth and be prepared with contingency plans.
Summary
There is a lot to think about when considering going out on your own and starting a business. It will be much harder than you think and you must learn quickly to acquire new skills as you go along. It will be a lot of hard work and long hours, particularly at the start, but if you get the preparation right and sell what people will buy at a profitable price, it will be highly rewarding and exciting roller coaster ride.
