Starting a business is an exhilarating experience! Often the perception is the starting the business will be the hardest part. Unfortunately, that’s often not the case. New businesses have unique challenges that often seem to appear out of thin air and send businesses into a quick tailspin.
Much of this challenge stems from the fact that businesses fail to anticipate these issues on the road ahead. Here are a few problems that commonly impact a start-up:
Poor Market Research You have a brilliant idea, but without a proper market-research backing, your launch and growth strategy might be adversely impacted. Before investing, do a little market research: find out the size of your target market, existing competition, and viability of your product/service in current market conditions.
Lack of proper Business Plan Writing a proper business plan will help you with the following:
- Focus the mission and vision of your business.
- Highlight the customer problem your business is solving.
- Define the target customer and market opportunity.
- Outline how the business will run.
- What the budget should be and realistically project how much money the business will potentially make.
Don’t rush into new markets without a clear focus and a good business plan based on solid market research and competitive analysis.
Poor Marketing Strategy
Once you have defined your target market, you need to devise an effective marketing strategy. Print advertisements, TV and radio commercials could be costly for you at this stage when you are just starting. If you believe that your potential customers can be targeted online, then reach out to them through social media marketing or user-generated review sites.
For a non-social network audience, ads in the cable TV, hand-outs with local newspapers and pamphlets displayed in local prominent stores/restaurants can be very effective. Assess the options that will work the best for you.
The majority of small businesses fail due to a cash crunch. A common mistake that most entrepreneurs make is to assume immediate profitability that results either in the risk of raising insufficient capital or investing heavily (and often unnecessarily) in luxuries like premium-priced office furniture, top-of-the-line computer and telephone systems, hiring more employees than needed etc.
Being optimistic is good, but be cautious about spending unnecessarily and start saving for a rainy day like slow sales, market recession and slow/bad debts. Keep in mind, even during cash flow problems you will still have employees and suppliers to pay.
One of the most common problems of new businesses is that they offer lower prices to beat the competition. Large companies cut costs by purchasing in bulk and through exclusive supplier contracts and better logistic planning. Therefore, these companies can offer rock-bottom prices for their goods and services. It’s useless to compete with them by slashing your prices as it will only eat up your profits. Instead, concentrate on offering fair market value for your products, providing excellent customer service and better marketing.
Maintaining Work-Life Balance A start-up is a serious commitment. Most entrepreneurs are seen working around-the-clock to cater to the overwhelming demands of the business. This stress often spreads into your personal life adding additional pressures. Remember, your family and friends are your support group who will see you through the tough times. It’s a good idea to make a work schedule and strictly adhere to it to strike the right balance between your work and personal life.
I, Me, Myself
Another common problem for most entrepreneurs is that they believe they can handle everything by themselves. The ‘one-man army’ is undoubtedly cost-effective, but it is not a wise decision in the long run. If you think you don’t need, or can afford full-time employees, then at least hire part-time resources or help on a retainer basis.
The idea is not to frantically look for a person when you desperately need one. Good employees are like long-term reliable assets, hence investing in them is crucial for the business.
Organizing the Company
It might be regarding the process of business set up, choosing a good location for your business, or taking into account applying and obtaining special permits/licenses to run your business; they all sum up to how you have perceived your business concept and organized your priorities. You can always avoid these problems by consulting a mentor, hiring people or buying programs that can help you organize.
While there are many potential pitfalls, how you handle those problems will codify your entrepreneurial skills and business acumen. The best solution is to take the time to do proper research and planning when setting up your business to avoid most of the common issues.