Its quite disturbing that very few start up businesses make it through the years . Failure is usually down to a number of clearly identifiable
mistakes, which if small business owners are aware of, can increase
their chances of survival. Here are the most common mistakes
which small businesses tend to make:
1.Lack of Market Research-When a budding entrepreneur comes up with
an idea for a new business he assumes that because he would buy
such a product or service then everyone else will. This may be the
case for day-to-day necessities but for other items this is usually
not so.It’s important that when you start up you carefully research
the market to check that: There is demand at a level which would
lead to a sustainable business; People are prepared to pay the
price required for you to make a decent profit. Undertaking market
research may appear time consuming but the effort will pay off.
2.Poor Record Keeping-Some business people are not born
administrators; they feel more comfortable getting out there and
‘doing the business“. Paperwork is too easy to ignore but can never
be put off indefinitely.Sales, purchases and other expenditure must
be carefully documented, so you know whether you are making a
profit or not. Invoices must be issued on time and chased up
promptly if there is a delay in payment. It’s all very well having
the sales but poor record keeping can hold you back.Having your
paperwork in order will also save you time when it comes to doing
your year-end analysis.
3.Insufficient Capital-When starting off , it’s easy to decide what
capital is required for fixtures and fittings, machinery and stock.
What many new business owners forget about is the cash needed to
fund day-to-day requirements, i.e. cash to pay expenses before your
customers pay you. This is known as your working capital
requirement.Small businesses can fail because they have
insufficient cash to start off to meet these immediate expenses. If
you wish to survive make sure you set aside enough cash to meet all
your needs for the first few months.
4.Ineffective Marketing Or None At All-You cannot afford to treat the
cost of marketing as an unnecessary expense. A business with no
marketing is like waving in the dark – you know you are doing it
but no one else sees you. There are many ways to promote your
business on a small budget; it just requires some creativity. What
ever you do, don’t assume that people will quickly know you are in
business,you have to tell them.
5.Ignoring Changes In The Market Place-As a small business owner it’s
very easy to get immersed in your business and not see what is
happening around you in the market place. Always keep your eyes and
ears open to what the competition is doing and what your customers
want. Don’t get left behind.
6.Owner’s Attitude -Attitude is everything in business. Don’t forget
that the real boss in your business is the customer. Running a
business may make you feel important but don’t let this develop
into an “I am better than you” attitude. Do this and you will
quickly chase your customers away.
7.Spending On The Wrong Things-Being in business can be exciting,
especially as the cash starts to come in. However, don’t be tempted
to spend it on a new car, a house or just a good time. If you are
to own a successful business then you have to keep some cash back
to fund future growth. A business cannot grow without cash, so
commit to spending business money on the business.
8.Dependent On A Small Number Of Customers-Don’t fall into the trap
of setting up a business just because one person says they will buy
from you every week or month. Setting up and running a business,
which is dependent on one customer, is not a recipe for success.
What happens if, one month after you have spent all your cash to
set up your business, that customer says he has changed his mind
and has decided to buy elsewhere? Unless you can find other
customers very quickly you are faced with closure.Before embarking
on a new venture make sure you have a sufficient number of
customers such that if a few go elsewhere you can still continue
trading.
9.Growing Too Quickly-Surprisingly, growing too quickly can be a
problem. You have to be disciplined enough to only take on work you
can handle. If you are tempted to accept too much you could end up
disappointing not only the new client but also your existing
ones.Also, don’t under-estimate the impact rapid growth can have
your administrative burden. As I mentioned earlier, getting behind
on the paperwork can have an equally damaging effect on your
business.
10.Trying To Do Everything-Finally, the problem most small business
owners have is the fact that everything falls on their plate.
Inevitably this is how it’s likely to be in the beginning, when the
limited budget means that staff are a luxury, but as the business
grows be aware that you cannot continue to do all tasks. There will
come a point when you become inefficient and not have enough time
to complete everything in sufficient detail. Taking on an extra
pair of hands will increase your costs but you will be surprised at
how much time will be saved, allowing you to do what you do best –
getting the business in. Take a look at each of the mistakes and
make sure that you don’t fall into these traps.
