But no matter how much time and money you put into starting up, your new business could fall flat on its face if you aren’t aware of and take steps to avoid these common business traps:
1 – Not writing a business plan
If you’re not seeking outside investors or trying to get a business loan from a bank you may think you don’t need to write up a business plan. Gathering all the data you need for a business plan will take time away from the other things you want to do to get the business going, and besides, you know what kind of business you want to start, so why bother writing it all down? Right?
A business plan isn’t just a document to be used to raise money for a business. It’s your business roadmap. It helps you focus not only on your goal, but also on what it will take to reach your goal. Say you want to bring in $100,000 in sales your first year in business. The business plan will make you consider the number of customers you’ll need to acquire, how you’ll acquire them, and what costs will be associated with selling your products or services. Without those details, you have no way of knowing if your sales goal is realistic, or if you’ll make a profit.
2: Insufficient cash to run the business
Writing a business plan will help you estimate the amount of cash you’ll need to get the business going, but unless you’ve run a similar business before, you are still likely to run into a few financial surprises and setbacks along the way. Then, too, it may take a lot longer than you predicted to build a steady flow of customers and cash. To minimize your risk of falling into this trap, try to find out how much other similar businesses spent to get started, and look at trade journals or other resources to determine average annual sales for the type of business you plan to start.
3: Underestimating the need for marketing
No matter how good the products and services you sell are, they won’t sell if customers don’t know (or forget!) that your business exists. The friends and family members you hope will talk up your business and send customers your way, probably won’t. The business acquaintances who told you to told you to give them a call once you got started, will be out of the office or in a meeting whenever you try to reach them.. And the social media pages you hope will get you sales or leads? Surprise! You’ll need to market those pages to get them found.
Avoid this trap by developing a carefully thought out, well-rounded marketing plan for your business. The plan should identify your target customers, the various ways you’ll need to reach them and amount of funds you’ll need to do the necessary marketing. Remember, marketing is an ongoing activity, not a once and done thing.
4: Leveraging far more opportunities than are viable
The success of any business hinges on the entrepreneur’s ability to spot great opportunities and take advantage of them in time. However, it is critical to assess the viability of the opportunity and only take it up if it is aligned with your current business focus and if your business is truly ready to add new products of features. Your business finances, manpower, current operational efficiencies, and customer base all have to be considered thoroughly. Will the new opportunity fit in with business without compromising your current level and quality of operations? If not, shelve the idea, at least temporarily.
Besides stretching your resources, jumping on every idea that comes along could prevent you from being seen as an expert in any of your core business skills. Clients you target for your management consulting services may wonder how good you really are if you’re also selling web design services or nutritional supplements on the side.
5: Being inflexible
In a highly competitive marketplace, your business needs to stay focused, but also stay aware of changing marketplaces and alternate approaches to reach your goal. Your business plan may call for you to target small local businesses with your product line, but the most profitable market might be corporations that buy in quantity. The software your developing for desktop computer use may also need to run on smart phones. While you don’t want to shift gears every time someone suggests an alternate route to you, your business plan and your own attitude should be flexible enough to let you change course when there is sufficient evidence that doing so is in the best interest of the business.
6: Not staking your claims online
Like it or not, businesses today need to be found on the Internet, and they need to be found in multiple places on the Internet. Consumers and B2B customers alike turn to the Internet to find products and services providers and to research what they buy and who they buy it from. Even if you typically get most of your business by word-of-mouth, the people who hear about you will most likely look you up on the Internet before they contact you. They’ll search on their smart phone or their computer. They’ll look for your website (and wonder about your professionalism and longevity if you don’t have one). They’ll look at your social media pages and profiles. And they may look for you on YouTube and Slideshare, search review sites for comments about your business, or search the major search engines for terms such as,”Has anyone heard of …”