The thought of launching a new startup business can be exciting and running a successful business can lead to financial freedom. On the other hand, this can equally be risky and success is not always guaranteed. Businesses are most vulnerable during startup phase. According to statistics published by the Small Business Administration (SBA), seven out of ten new employer establishments survive at least two years and 51 percent survive at least five years. These figures shouldn’t really scare you but they are meant to prepare you for the challenges faced by entrepreneurs starting up a new business venture. This article looks at the common errors or mistakes new business owners make which can lead to business failures, and are meant to prepare and help you succeed in your new business venture.
1. Lack of Planning
As a new business owner, you have two major responsibilities: looking after your new businesses and planning for the future growth of the business. Planning is very crucial for any business not just for a startup. It is through planning that you will be able to identify new opportunities and be able to take advantage of them. Planning puts you in a position to take better decisions and be able to take necessary actions for the growth and sustainability of your new business. As the old saying goes, failures do not plan to fail, but they fail to plan.
2. Wrong Reasons for Starting your business
While launching a new business in order to become rich seems like a good idea, this reason alone can lead to an unfulfilling experience. It is important to venture into schemes that can bring you great fortune and possibly make you very wealthy. However, you also need to strike a balance between profitability of the business and the passion, interest or drive that goes with it. It is that drive that keeps you going when the going gets tough especially at the early startup phase.
3. Expanding too Quickly
One major cause of business failure is when new businesses try to expand too quickly. This often occur when new entrepreneurs confuse success of a new business with how fast they can expand. There’s a saying that goes: “Slow and steady wins the race” but it’s also essential to act in a way that doesn’t repress growth by being too slow.
4. Marketing to the wrong people
While it’s essential to promote or market your products and services, it’s essential that you promote it to the right people, not just to anyone you see. It’ll be a complete waste of time to sell to people who do not need your products.
5. Not carving out a niche/Not having a clear direction
You need to know the direction you want to go right from the onset and work towards that, sometimes it doesn’t always go as planned and you have to be willing to make the necessary adjustments along the way. You also need to carve out your market niche and try to become a leader in that market. Don’t try to copy or replicate what everybody is doing, “observe the masses and do the opposite” this implies carving out a niche and trying to become a leader in that area by being different, by being unique, by being YOU; try to be unique and stay unique. There’s nothing wrong with trying a few things here and there to find out what works but always remember to streamline and focus on a few things that you can do later, as Steve Jobs puts it:
“People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying no to 1,000 things.”
6. Inefficient Management
The problem faced by most new businesses is inefficiency and not having a clear knowledge of what the business is all about, this can sometimes lead to reckless decisions. Solution to this is proper education and training, you can either train yourself or hire those who have expertise in the fields where you are lacking.
7. Not Getting Adequate Funding
This is the single most common reason why startup businesses fail, every business needs cash flow and when that much-needed cash has dried up before the business starts making money, the business prospects don’t look good. You need extra cash to cushion the effects any unplanned contingencies that might crop up during your journey to success.
8. No Online Presence
In this age and time, online presence is essential for any business to succeed; you can hire a web designer or programmer to get you up and running. Social media presence is also essential; you can create free accounts on Facebook, Twitter, etc.
9. Hiring the wrong people
The quality of the people you hire will determine how successful your business will become, hire the right people and you have a successful business and vice versa.
10. Bad Luck
Luck is where opportunity meets preparation but there are times when that opportunity is either delayed or not just coming, there may also be times when all the necessary preparations have been made and unforeseen circumstances beyond our control could result to business failure and we call it bad luck.