According to the U.S. Bureau of Labor Statistics, 20% of new businesses fail within the first two years and nearly half of them don’t survive past the fifth year. This begs the question, “How can you make sure your business is a success?” The fact is, starting a business is never easy and entrepreneurs are bound to make mistakes along the way. Unfortunately, some of these mistakes can end up being the demise of your business. Here we will take a look at seven of the biggest mistakes entrepreneurs make so you can avoid them and keep your business moving in the right direction.
1. Hiding from Problems
Things are going to go wrong from time to time and when they do, you should never hide from them. It is imperative that you address any problems head on and seek a solution right away. If you pretend nothing is wrong, you will continue to dig a deeper hole until you are in so deep that it’s difficult or even impossible to get out. It’s only when you face problems that you can find solutions.
2. Not Creating a Budget
Dealing with your finances should be at the forefront of your business plan. You should be able to account for every dollar that is spent on a daily, weekly, monthly, and yearly basis. You must have a clearly defined budget so you can plan for all expenses. Furthermore, once you establish a budget, you must stick to it. A realistic budget will help keep your business healthy and sustainable.
3. Having High Fixed Costs
Your fixed costs are your expenses that you owe every month such as rent, salaries, and cost of supplies. If you have high fixed costs and not enough customers, you will quickly find yourself in debt. Think carefully about what expenses you really need and make wise choices. For example, you may need an office to operate your business but you don’t need to rent prime real estate. On the other hand, be deliberate about investing wisely in things that do matter such as paying higher salaries for more qualified employees.
4. Failing to Stay Organized
Running a business can be crazy and chaotic at times. After all, there are dozens of things happening at the same time. Therefore, it is critical that you have an organizational system to help you keep track of your daily operations. You should have a clear understanding of exactly what is happening each day and what needs to be accomplished each day. If you fail to stay organized, you will quickly lose control of your business.
5. Failing to Understand Your Target Audience
A common mistake entrepreneurs make is not taking the time to really learn and understand their market and what customers are looking for. It’s important to remember that a great product doesn’t necessarily translate into a successful business. You have to be able to recognize the needs and wants of your target audience and market your product successfully to this group. Therefore, test your products and services before starting your business. If you don’t, you have no idea whether or not people will want to buy it.
6. Ignoring Your Competitors
Ignoring your competitors can be a fatal mistake. You have to be aware of your competition and how your business compares or you are surely going to fail. For instance, if you are selling your product for $10 and a business down the street is selling something similar for $6, which one do you think people will buy? This is a basic example, but it demonstrates that you must be knowledgeable about your competitors’ pricing, marketing strategies, employment opportunities, and overall product performance if you want to succeed at selling your product.
7. Not Investing in Marketing
We have heard the saying, “Build it and they will come” but this isn’t accurate when it comes to running a successful business. Without effective marketing, no one will know where to come or why. All too often small businesses are reluctant to spend money on marketing because they are trying to prioritize their spending. However, a marketing strategy should be one of the main areas that a business does invest in. It is important to develop a marketing plan that encompasses a variety of platforms including email marketing, social media, advertising on TV or in magazines, and also advertising in person at various events. In order to be successful, you have to build your brand awareness through a marketing plan.
