Unfortunately businesses are very susceptible to failure and many of the new ventures fold up within the first year. Studies have revealed that about 25 per cent of the new businesses close down within the first year of their formation, while about 50 per cent of the companies go out of business within three years of formation. Starting a business is not an easy thing at all – it goes without saying that when you start a business you need to put in a lot of effort and face a lot of challenges.
If you are going into business, you should be aware of some of the common mistakes which most entrepreneurs commit while opening a new business. We offer a few tips for you.
The first area that is extremely important is research and planning – if you do not do this right, out goes everything. Research and planning is vital to determine if your business idea is viable, workable, and if your pricing is right enough to capture the market and bring you adequate returns. Before you even take the first step you have to feel the pulse of the people – the pulse of your potential customers and find out their needs. Talk to your friends, relatives, staff, and potential customers about your plan and listen to their feedback. Positive feedback can give you confidence to take your forward. And, if you receive negative feedback, be extremely cautious. If you do not do your market research properly, you will end up selling the wrong product to the wrong person.
The second area that is extremely important for any business is financial planning. Poor financial planning without any adequate capital is sure to land you in trouble or troubles. Having adequate capital is extremely important before you start any venture, and inadequate capital is not a good indicator for any business. You need to have a definite plan before you set foot in any venture, and a word of caution – do not start any venture without a plan. It would be wise to seek professional advice before you set your plan into action.
Do not set your sights too high! Be realistic and cautious, but you should be in a position to realise your business potential. You shouldn’t make over-zealous forecasts. In the first year of business it would be prudent to go steady rather than set a fast pace. Inaccurate forecasting may lead to quick depletion of cash levels. Ensure that your hire only the basic staff during the first year. Your concentrations should be on profitability rather than anything else.
Keep an eye on the competition at all times, and no matter what happens, you should not forget this. If you forget the competition, there is a strong likelihood of your overlooking the competitors and their products. If you are not aware of any competition, you can get cues by observing the following things:
i. Watch for ads in various media – newspapers, magazines, journals, television, flyers, and pamphlets
ii. Look out for press reports and press releases
iii. Keep an eye for web releases and web ads
iv. Exhibitions and trade fairs
Take cognisance of the competition and make efforts to beat the contenders and establish yourself and your products in the market.
Have the right team in place: Take care to see that you choose the right staff. Your success and the success of your business would depend, to a large extent, on the type of people you employ. Make sure that your hire people of skill, experience, and expertise – these are the people who will take your business to the pinnacle of glory. You should, therefore, make sure that the people you employ are committed and sincere. Hiring the wrong people would have its own repercussions. If you are the boss, it is not possible to do everything by yourself, and so delegate – delegating the right task to the right person is important and essential.
The author talks about start-up businesses and ventures and the difficulties that one encounters while doing so. It is a well known fact that first-time business owners do have to face a lot of hardships and problems on their journey to turn their dream into reality. If you are going to start a business, you should be aware of some of the common mistakes which entrepreneurs commit while doing so. He offers few tips on what mistakes not to commit while opening new ventures.
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