Some 20 percent of startups fail in their first year, and 50 percent do so during the first three years of operation. These numbers shouldn’t scare you away if you want to start your own business, but they should get you ready for some of the problems business owners face when they start up.
The truth is that your new business can do very well if you work hard and know what’s going on. This includes knowing what issues and errors to avoid (where possible) in order to move forward and be successful. Read on to find out some of the things you should avoid when you’re starting a business so you can enjoy the process and come out on the other side with a thriving company.
Being Scared To Fail
It’s important to have confidence in your business, but it’s also important to understand where the problems might lie and to understand how to avoid these issues if you want to avoid failure.
The problem is that sometimes, no matter what you do, you will find you make the wrong decision or come across an obstacle that you can’t get past, and you essentially have to retrace your steps. This will happen, but it will also make you stronger and give you even more confidence to move in a different direction.
However, some people are so afraid of failure that they don’t try these ideas or make these decisions. They try to stick with the status quo and keep going the way they have always gone. Ironically, this will lead you to failure because your competition will get ahead of you, and your customers will become bored of you and your lack of innovation. So although failure is scary, not taking any risks at all is a mistake too. You’ll need to try out some new ideas, so just make sure you work out all the details first.
Not Having A Business Plan To Follow
Writing a business plan is a key part of making a business that will last and stand out from the rest. A strategic business plan builds momentum, which means that you have the best chance of succeeding because you have a clear, well-researched idea. Running a small business is hard enough as it is, so you need all the help you can get.
Still, a lot of small businesses start up without thinking about the big picture. They don’t know anything about the market, finances, business model, or logistics. When things go wrong, this lack of knowledge can cost them time, money, and effort. Also, they don’t have a mission statement that they can stick to when things get hard.
Don’t make this common mistake. Instead, make a business plan to help you figure out what you don’t know and where there are gaps you need to fill.
Your business plan should be reflected in everything you do within your business. This helps you stay on track to meet the needs and goals of your business and build a successful one.
Not Being Organized
Lack of organization causes more problems than just measurable losses. It can harm a company’s reputation, chances for growth, and competitive edge. It also makes people more stressed and lowers morale at work.
There are many ways to be disorganized, and perhaps in your personal life, this doesn’t matter, but in business, it can cause a lot of issues. For example, simple things like looking for lost tools, supplies, or computer files can quickly add up to become big time-wasters that distract and make it hard to get work done. Most people don’t think of the time they spend looking for things as a waste, but when that time is turned into real costs and multiplied, the real losses add up to a lot.
Every day, the costs of missed opportunities because of bad organization grow. When deadlines aren’t met, costs can go up, and business deals can be lost. Details about your products, how you sell them, and how you hire people will help your business succeed only if people remember them. When details are missed or forgotten, they become a costly liability.
People who pay too much attention to too many things don’t understand their goals and waste resources. When employees don’t put tasks in order of importance, they often don’t reach their goals or accomplish their purposes. Disorganization can also make it hard for people to talk to each other, which can lead to costly duplication or a lack of clarity in team efforts, which in turn leads to even more missed chances.
As you can see, this is a big problem in business, and it pays to develop effective systems and processes that will help you and your team stay more organized and therefore more effective.
Not Considering How Damaging Chargebacks Can Be
Your new business is up and running, sales are coming in from your website, and things seem to be going in the right direction. However, that doesn’t mean there aren’t hidden problems you need to be aware of. For example, you should keep an eye out for chargebacks, which are a sneaky danger that many new merchants don’t find out about until it’s too late. Chargebacks are a risk in eCommerce that can happen at any time. Chargebacks can hurt your business, so you need to know what they are, how to stop them, and what to do if they happen.
When a cardholder contacts their card issuer to question a charge on their account because they don’t recognize it or perhaps because they were unhappy with the service or products they received, this is called a “chargeback.” If a customer files a dispute, your acquiring bank will let you know that a chargeback is pending, and the biggest issue is that the money will be put on hold – you can’t access it. Perhaps you don’t consider this a problem if it’s a small amount, but what if it’s a large amount and you can’t pay your bills while the investigation is happening? Or what if those small amounts add up over time and cause an issue with your profits? Read more in the article Chargeback Prevention: Why Chargebacks are Dangerous for Business to find out why it’s such a problem and what you can do about it.
In most cases, the best thing to do is have chargeback prevention systems in place if possible. This will help to protect your money while an investigation takes place.
Trying To Do Everything Yourself
Entrepreneurs make a big mistake when they think they are alone and try to run their businesses on their own without getting advice from others. Don’t try to start a business on your own. Find and hire trusted, experienced advisors with whom you can talk about your business’s ideas, strategy, problems, and progress. A lot of advice can give you both wisdom and power.
This is the key. You don’t have to hire people, and you can do the work yourself if this is what is needed (or even what you want to do – not everyone wants a huge business, and they are happy to keep working for themselves without worrying about anyone else). However, you do need to have people you can go to for help and advice. This guidance could make all the difference in how successful you are, and it won’t cost you anything.
Ignoring The Competition
Ignoring your business competition is another business mistake that could be fatal. If you sell something for $10 and your closest competitor sells something similar (or even the same) for $8, are you going to sell anything at all? Perhaps you will – it will depend on what extras you offer and so on – but unless you research your competition and find out what they are doing, you are simply guessing what you should do and not making a real plan based on evidence.
When you look into what your competitors are doing well, you can learn from them. It also shows you what challenges your own business will face in the future. If you do good research on your competitors, you won’t make the same mistakes they did.
You also need to know about market saturation, which is an important part of competition. Every product or service has a limited size. So, if you want to start a floristry business or a consultancy firm, you might not be able to in your area because there are already so many. This would mean you need to look at different locations or different business ideas, and although you might not want that, it’s better to know you have to than to plow on regardless and have to close down soon after opening.
A Lack Of Funding
If you’re curious about the biggest reason why some businesses fail, the answer really shouldn’t surprise any business owners who are serious about doing well. In case you haven’t guessed yet, the answer is a lack of money.
The reality is that to get started, some businesses need a lot of money. Some can start up with less money than others, but they will still need something for marketing and stock, for example. How much money you’ll need to get started will depend on the kind of work you’ll be doing and the tools you’ll need to do it well.
Your business plan can help you determine what you need to fund your business. Your plan should have an estimate of how much your business will cost to start up, as well as how much you’ll need to invest or borrow.
(Disclaimer: This content is a partnered post. This material is provided as news and general information. It should not be construed as an endorsement of any investment service. The opinions expressed are the personal views and experience of the author, and no recommendation is made.)