Starting a business without any prior knowledge isn’t always easy. Like everything else, a business does require some kind of expertise to grow and flourish and to establish itself in the market. There are a variety of aspects that one needs to take care of before starting up a business as one wrong decision can jeopardize its health in an instant.
Although there isn’t any foolproof business plan that guarantees 100% success, there are a few fatal mistakes, avoiding which can make a huge difference.
Here are a few critical pitfalls that even the most passionate entrepreneurs make, which when avoided guarantee success!
Failing to plan efficiently
Planning may seem to be a very tedious and time-consuming process, but no business can suffice without successfully planning its actions, activities, etc. You do need a solid plan to survive that should include information on the business research ideas and market potential, without which you will be operating in the dark. The three most important types of plans that your start-up needs to build include a business plan, financial plan, and a competent marketing plan. There are so many business plans available online in the form of PowerPoint templates and word document. Take help from there and make a proper business plan initially.
Undervaluing one’s goods and services
We often don’t realize the value of our products due to the lack of confidence in our potential. Hence, we tend to undervalue our products and set a price that isn’t competent enough. This can have a detrimental effect on our overall functioning as we tend to undermine the unique features and capabilities that our product brings to the table.
Setting up a competent price requires a lot of brainstorming. It also needs a thorough knowledge of the target market. So, research thoroughly and extensively before you start your business and set up a price point for your goods and services.
Not setting achievable and measurable goals
Setting up goals well in advance is an important aspect as they give you a direction when you are starting up. They keep your day-to-day activities in check and also track them.
So, set up not only achievable and measurable goals but SMART i.e- Specific, Measurable, Achievable, Realistic, and Timely goals which are a prerequisite to an organization’s success. With these SMART goals, you will be able to identify where you want to take your business.
Not keeping the financial data in place
At the entry-level, most of the entrepreneurs tend to forget the importance of creating viable Profit and Loss statements as well as Income statements- containing data of all the key transactions. They undermine the need of keeping records of all their financial transactions that can prove helpful in the future as they can review them on the go.
Entrusting cash flow management to accountants
New businessmen often make the mistake of delegating their cash flow management either to their accountants or assistants, to focus on attracting customers and making sales. However, this can have a negative impact as diligent assistants can over-order some stuff or make early payments. Thus affecting the financial health of the business.
Not differentiating cash flow and profitability
Some businessmen fail to differentiate between cash flow and profitability while aiming to build a large customer base at any cost. It is important to know how quickly cash can be burned and so one should focus and balance out both the cash flow and profits to maintain the optimum health of the organization.
Not deciding upon your target audience
Deciding upon the audience that you want to target and sell your goods is extremely necessary. Similarly, not knowing what they want and need also leads to the failure of a business. You need to analyze the market and conduct thorough research on it to identify the audience you are targeting and therefore develop your product as per their aspirations, keeping in mind the state of the market. Having a thorough knowledge of the product helps in identifying how to approach the customers and also to determine how they will react to your product once it gets launched in the marketplace.
Failure to keep a track of the customer receivables delays
Usually, a payment has to be made by the customer within the next 15-30 days of purchasing a product. But some consumers assume that this time period can be extended as per their convenience until and unless you prompt them to pay. They won’t pay until you send them written notice. Not receiving timely payments can gravely affect a company’s financial health resulting in its closure. Therefore, it is important to keep a proper record of the customer receivables and delays in it.
Not updating your technology
Change is an inevitable factor that every organization has to deal with. Therefore, to keep pace with the changing trends in the industry, it is important that an organization regularly updates its technology. Technology provides new opportunities and helps the organization to increase its efficiency along with saving some money.
Adopting new technology can be quite intimidating so a few organizations may opt-out of it which can hurt the overall health of the organization.
Not adopting the right marketing strategy
Marketing can take various forms from traditional marketing to word-of-mouth referrals to the internet and social media marketing. Adopting the right strategy can really help the business to grow. Marketing can help a startup to create a hype for their product in the marketplace even before it has been launched.
There aren’t any definite rules and regulations when it comes to marketing. One can determine the most suitable one by analyzing the market potential, business demands and customer requirements.
Not paying attention to the recruitment process
Not hiring competent employees and giving them sufficient training will destroy your business faster than running out of cash. Also, managing the current workforce is also very important.
Since new entrepreneurs hardly have any experience in it they should seek some professional help to recruit qualified employees.
Overspending and underspending on business operations
Starting a business does not always require a huge investment. Though some businesses might need it, most of them don’t. Some businessmen think that spending a huge amount of money than what is necessary will bring them great returns in the future. So, they tend to overspend on everything which might lead to losses., thus leading to the breakdown of the organization.
Similar to overspending some businessmen are frightened of spending a lot of money and so they tend to underspend and not generate a sufficient amount of funds which is also not a very healthy option. It can severely limit an organization’s potential for success.
Conclusion – To build a successful business not only a great vision and creativity is required, but it is also important to wave off all these pitfalls that hinder the proper functioning of an organization. As an entrepreneur, you should make efforts to avoid these perils by hiring a few professionals to help you with the process.