Wednesday, 26 February 2014

5 Reasons a Start Up Business Could Fail

Although the economy appears to be picking up, with some economists predicting market growth that would have been unbelievable just a couple of years ago. The current jobs market is still hard and unpredictable, perhaps this is why more and more people are starting their own businesses. 

Do you have a inclination and an entrepreneurial spirit? If so here are five common mistakes to avoid making when starting your own business...

1) You don’t have a Business Plan!

Starting a new businessThere are essentially two types of business plans and when starting a new business you require both. The first is the type you would show your bank manager, it is full of what they would like to see and analyses your competitors, marketplace, advantages, marketing and more. This is is important as it gives you an overview of where you are headed from the start.

The second type is an internal plan for the business. It charts who is responsible for what tasks, it outlines the daily responsibilities for each person and discusses the vital aspects of the business such as how much money is needed to keep the lights on. By knowing what’s at stake when you enter the premises in the morning, you’re more likely to tackle tasks like your business depends on it!

Starting a new business
2) You don’t Invest Enough!

When starting a new business, often one of the biggest problems is that people don’t invest enough cash into making sure the business will succeed. You  may have a brilliant idea and you’re sure it will work. However, initially before you start making money you’re going to have to invest capital to make it succeed. Whether it is set-up costs, initial running costs or many of the other hidden costs involved in a business you need cash to keep going at the start.

However, no one will tell you spending money is the cure for lack of experience or a bad product. While you have to have cash to start your business, realise that you’ll need this cash to last for a long, long time. A company that can control overheads but skilfully deploy capital to solve the correct problems is more likely to be successful.

You’re afraid to market your product/service. 

EVERY job is a marketing job when it comes down to it. To be a successful business you have to ask people to buy what you're selling. Some businesses manage to appeal to the population at large without much effort, but assume that this isn't going to be the case for your business. You’ll need a marketing plan that details how you’re going to find your customers. What are you going to do to get them? Will you attend trade shows? Will you generate buzz via social media? Will you set up a referral scheme?
A marketing plan is important but if you don't keep detailed records, that allow you to work out what is working, your plan is basically worthless. You need to know what is working and be able to change course if things are not working.

4) You Don't Delegate...

Big companies have great training programs for their employees and even companies that are not great know that their employees need to know what to do. You need to be able to show your people how to work. You need to make sure that they have some clue what they need to do next. If you’re wondering why your employees are standing around and you’re doing all the work, look at yourself and ask why you haven’t told them how to do their job better.

5) You aren't interested in “the numbers.”

They may be boring, but being on top of "the numbers" is all important. Whatever your speciality is, whether you’re great at marketing, but terrible at accounts, fantastic at organisational planning, or absolutely rotten at logistics, your business will generate statistics that show a picture of how you're doing every day. You need to always know "are you winning?".

Failing to look at the numbers can lead to big trouble, you need to know the health of your operation to make decisions appropriately. Are you growing or dying? Where do you need to improve and where should you focus your efforts? It’s difficult to know what to do unless you have numbers at your disposal.

here are many pitfalls budding entrepreneurs may find themselves stumbling over. But if you focus on the areas we've mentioned you’re more likely to have that successful business you’re hoping to introduce to the world.

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