Entering into a new business is scary and risky. And sometimes one mistake can derail all of your carefully made plans. But being prepared for the most common mistakes new business owners make can help you ready yourself as you launch your startup.
Failing to Draft a Business Road Map
With a new business you will transverse new areas, which is why it is so important to have a business plan. Business plans are your startup road maps. “A business plan provides a road map of what the business is, its strengths and weaknesses, strategic advantage, opportunities in the local marketplace, outside threats, revenue projections, costs, estimates of profit/loss, and outlook for long-term success,” explains small business finance expert Rohit Arora, CEO of Biz2Credit.com. “You cannot get to where you want to go unless you know what route you are going to take.”
Not Knowing Your Niche
How are you positioning your company? Who are you targeting your product to? Knowing your niche is essential to securing a foothold in the marketplace. “Often, a new business owner is so excited about their product or service that they neglect to make sure they know who their target consumer/customer is. Having a clearly defined positioning concept for a business is critical as it serves as the linchpin for all marketing communications for the company. All the selling in the world won’t develop sales unless your get the message right,” explains the self-dubbed Concept Queen Martha Guidry, principal of The Rite Concept.
Failing in the Finance Department
Idea? Check. Business plan? Check. But what you will sorely need is funding for your idea. A common mistake for entrepreneurs is under-financing their startup. Running out of money halfway through your launch can kill any new firm. “Many entrepreneurs underestimate how much money it really takes to start a business,” says Arora. “If you don’t have a sufficient amount of capital and then have to go back to the bank, it is a much bigger challenge to get a second round of funding. Loan officers will wonder about your planning abilities or — worse yet — the viability of the new business,” she adds.
Who’s in Charge?
Entrepreneurs have to be leaders. They must not only convince people to invest money in their dreams, they also have to convince new employees to believe in them and follow their lead. So if you are not a good leader, hire one. “All too often, the person with the title and the corner office to go with it lacks the vision, the courage, or both to make the difficult decisions that are always required to keep the company on strategy,” says marketing/management/branding expert Mark Stevens, CEO of global marketing/management firm MSCO and author of Your Marketing Sucks. “Instead of serving as true leaders, they engage in ‘followership.’ Leaders must lead. Popularity contests are for ‘American Idol,” says Stevens.
Suffering from Tech Phobia
Today, companies can be made or broken in the digital arena. Making use of the perks of technology is a must for new businesses on various levels. “Entrepreneurs can utilize technology to more easily access capital, search for lower cost inventory, find employees, and market their firms,” Arora points out. “Even in the 21st century, I still encounter many small business owners who do not have a web presence. Having a web page is not a luxury, it is a necessity,” she says. This also means promoting your business using search engine optimization, digital marketing and social media (Twitter, Facebook, YouTube, and Instagram).
Setting the Bar Too Low
When you are an entrepreneur you have to not only dream big, but you also have to aim high. Don’t prepare for failure – prepare for success. “Most business owners think in terms of worst-case scenarios if their new business fails. They create a back-up plan of what they will do if the new venture doesn’t work and they create a worst-case budget. Going into a new business with this mindset is like casting a death nail upon it,” business consultant Stacey Alcorn, author of Tuned In: Eight Lessons To Sales Success A Great Salesman Did Not Know He Knew, explains. “Great entrepreneurs don’t have an exit strategy because they step into their new venture with complete confidence that they will make the business work no matter what.”
Treating Clients as Disposable
Being desperate and greedy just doesn’t cut it if you are trying to build a solid client base. Sure it is exciting to land a new client but after wining and dining a potential client, don’t stop paying attention to them and their needs after you have landed the account. Stevens calls this the “The Lust to Lax Syndrome.” “A potential customer or client appears before our eyes, and we lust after the score specifically to land the new business. We may offer discounts, create all manner of Power Points, hold lavish dinners and the like, but whatever combination of romantic tools we apply, we are determined to give the object of our lust everything they may want to succumb to our courtship and come aboard,” he explains. “And then the dream turns to reality, we hit pay dirt, and all of the lust turns to lax. We dump the prospect into the customer file, assign them a number, and conduct a transaction and move on to sweet talk the next object of desire.” Happy clients equal business success, so be available to your customers and constantly work to fulfill their needs.
Relying on False Promises
Sometimes when people are eager to get their business up and running, they count on promises made to them, notes Alcorn. Don’t count of favors such as free office space, new business and even personnel support. Get everything in writing before opening your doors. And realize you will have to pay for start-up necessities.
Forgetting the Pomp & Circumstance
You business is not going to sell itself. You need to promote, promote, promote. “Invest in stationery and business cards,” says marketing expert Paige Arnof-Fenn, founder/CEO, of Mavens & Moguls. “Then you need to network like crazy, do something every single day to get your business off to a great start and build your brand.” Know the ins and outs of networking, points out Stephanie Walters, CEO of Blue Top Marketing, which assists small businesses with social media marketing. “People who attend networking events and just pass out their business cards to everyone in the room are saying that they’re not interested in getting to know that person and they’re only interested in promoting themselves,” she says. “You want to have a conversation with people and get to know them. By doing so, the connection created will translate to the business card that you hand them. Which means that they will remember that conversation when they see your business card again when they clean out their pockets and/or their purse.”
When promoting, have a plan. Don’t market by the seat of your pants, adds marketing consultant Andi Enns. “Many entrepreneurs forget to make a marketing plan and spend money in a seemingly random fashion — a newspaper ad here, a Facebook update there. Successful marketing plans identify strategies which reach your target audience and use those strategies consistently.”
Complacency in Your Nature
The customers seem to be flowing in but if you stay stagnant in your business thinking then your company will stall. “The truth is when the company’s growth seems so strong and certain that it can go on autopilot, management relaxes its reign on both the strategy and the execution of it, allowing a once-closely directed business to float. In the vacuum this creates, complacency takes hold,” says Stevens. Don’t forget to continue to market your company and product. “When you have steady revenue, it’s easy to relax on marketing. However, this is a recipe for disaster — marketing helped you get to the stable place and neglecting it will result in another dry period. It’s just as important – or even more important – to market when you have ample funds to do so,” adds Enns.
When you are doling out salaries, make sure you pay yourself. “One line on the projected profit and loss for a new business that often goes missing is salary for the owner/entrepreneur that is starting it. A good business person is clear as to his/her value and includes at least a pro-rated salary to compensate for his time invested in the business. Of course, the plan is that that number goes up, but whatever you do, don’t start with zero,” notes Alcorn.