Everyone wants to own a business. Nowadays, it is easier to open a business than at any time earlier in history of mankind. Startup culture is growing rapidly.
Newer, innovative methods of funding a business are available too. Procuring licenses now is easier and the Internet makes sales and marketing a child’s play.
However, most entrepreneurs fail to grasp that opening a business is easy; maintaining it is difficult. Making big profits is a Herculean task.
Moreover, keeping up your motivation and enthusiasm from waning requires inhuman effort. Consequently, businesses run into massive losses. Eventually, they close down.
However, here are some big mistakes to avoid when starting a business.
Mistake-1: Insufficient market knowledge
Very often, people open a small business with zero or limited knowledge about the product or service they will offer and prospective customers. Understandably, every product or service undergoes continual upgrade.
Unless you offer the latest to customers, chances are you will find no takers. Another major mistake is missing out on whether your customers in the geographic zone of operation really require the product or service.
A particular offering will have been widely accepted somewhere. However, that does not mean you can anticipate the same huge demand. You can avoid this big mistake as owner of a small business.
Mistake-2: Undercutting prices/ offering unwarranted discounts
Admittedly, every newcomer in any business needs to get popular fast. The easiest way to grab a few customers is by offering discounts or undercutting rates offered by competitors.
This policy is adopted by small and large businesses worldwide. Indeed, it is a accepted form of entering any market. Rivals also do not crib since they know the low price offering is temporary.
The big mistake that small business owners often commit is, they continue to sell at lower prices even after the introductory offer is over. Usually, the lower price is charged by charging zero or very minimal profits.
Sometimes, small business owners offer a product or service at the cost price, fearing a customer might revert to a competitor. This causes you to lose profits and sustain your business for a prolonged period at your own expense.
Mistake-3: Too little or too much publicity
Nowadays, advertising costs dearly. TV channels, radio, newspapers and magazines, street-side hoardings, banners, flyers, all cost phenomenally high. A common mistake small business owners do is by neglecting advertising altogether.
On the other hand, you may end up blowing a mini fortune on a large scale advertising campaign. Remember, the purpose of advertising is not to bag customers. It is to mark your presence in the market.
Advertising help customers to know they have an option or an alternative they can try. This option culminates into purchase, when a customer gets curious and wants to try your product or service.
Hence, too little advertising or too much is harmful for your business. It ranks as one the big mistakes that small business owners make.
Mistake-4: Involving close family members
For every new business, staffing remains a major concern. You will need full-time staffs which possess at least some previous experience in working for similar business.
However, staffing can be a major problem when you consider expenses and perks. Hence, most small businessmen involve their close family members- spouse and kids or parents to man the show.
Very often, running a business with family members proves disastrous. They begin experiencing pressures and stress of running a business. They are unable to isolate themselves from ups and downs of daily routine. Thus, you will end up ruining your personal life and business.
Further, you will also be reluctant to point out any mistakes or admonish your spouse, child or parent for something done wrongly. Hence, involving close family members is disastrous for your business- and personal life.
Mistake-5: Self deception about own business
Invariably, this is a great trap into which several small business owners fall. They believe their business is unique and brand, unbeatable. Remember, self- deception only harms you.
Your customers may have a great opinion about whatever you offer. However, that is no reason to gloat and rest on your laurels. Instead, it simply means you need to exert extra efforts to ensure consistency.
Lot of small business owners lose on this vital opportunity to maintain consistency. Consequently, product and service quality takes a dip. This further translates as disgruntled customers and loss of business.
Mistake-6: Unrealistic goals and expectations
Your business is like any other. Regardless of whether you offer run-of-the-mill stuff, or, something truly unique to your clients. One of the big mistakes small businessmen commit is setting unrealistic targets, goals and expectations.
Your brand may be welcomed in the market upon launch. Again, this is no reason to raise your targets and goals or expect very high returns. Remember, anything new will be welcome among customers. The spurt you witness in the start is just the proverbial spark in the frying pan.
Once the business settles, customers are bound to drop. Such decrease in customers tends to send alarm bells all around. Hence, always allot a time span between which you business will witness peak and trough. Set realistic goals based on these. Also consider seasonal demand.
Mistake-7: Cutting costs or spending beyond limits
Now these are two poles for any small business. Someone will attempt to cut costs in face of small profits. Others will increase spending in the hope of attracting new customers.
Both these ideas are destined to fail. Your business requires daily maintenance. There are costs that you can never avoid. For example, telephone, Internet, electricity, lease, transportation, among others.
Also, you need not spend more on some things such as advertising, extra sales and delivery staff unless merited, office equipment and other items. The best way to avoid this big mistake by small businessmen is take a daily or weekly review.
This will give you a fairly clear picture of what you need to invest upon and where your money is going waste. Plug all sinkholes that drain your money but open your purse for any new expansion, wherever justified.
Points to remember
There are several big mistakes that can simply be avoided by daily review of your business. The best way to avoid these mistakes is proper planning before you launch.
Remember, once you have floated your business, you may not have ample time to pay attention to nitty-gritty. This may cause inadvertent yet avoidable losses.
Simply, such losses can eat into your profits or sound death knell of the business. A little advance planning can fetch great profits.