5 Common Mistakes Made When Starting A New Business

Starting a business is one of the most daunting and challenging pursuits today. Statistics tell the story. According to the Small Business Association (SBA), an agency that provides support to small businesses and entrepreneurs, over 50% of new businesses don’t make it past their first anniversary.

Here are the reasons why: 

1.Not researching your target market  You’ve desired to start an electronics business for a long time and you’ve finally gotten the capital to do so. However, your strong desire can drive you to start the business in an area already saturated with electronics businesses. With so many electronic businesses in the area, it would be almost impossible to get your businesses off the ground, and you might close shop from the onset. That’s why it’s a good idea to first research your target market before you start any business. Your research should focus on identifying who your target audience is, and what it really needs. You should then come up with a product that satisfies that need.  

2.Failing to plan  A plan is the cornerstone of any successful business. Your business plan should spell out your business goals, how your business is going to realize those goals, as well as potential problems you may encounter in the course of running the business and their solutions. Ideally, the business plan should include key aspects, such as market analysis, competitive analysis, organization and management of the business, ins and outs of your products and services, marketing plan, sales strategy, and financial projections. 

3.Not having enough startup capital  It’s harder to start a business these days because (a)there are likely many other established businesses around that offer the same product or service (b) you have to cater for rent, businesses licenses, overheads, supplies and other aspects required to start a business. Without enough capital, your new business will struggle or it may fail to take off. When your business is struggling from the beginning, you may not be able to get financing. That’s because financing institutions look at the health of your business before they can extend loans to you. So, make sure you have enough startup capital to sustain your business until it gains stability or it grows to a point that you can easily qualify for financing. 

4.Not choosing the right location  If you’re looking to run a brick-and-mortar business, location is a very important factor to consider. For example, you’re more likely to make more sales if you set up your business in an urban area than in a remote area. Also, your business is more likely to thrive if you set it up near your target audience than away from it. An online presence is also as important as a brick-and-mortar outlet in this day and age. That’s because many consumers prefer to shop online than walk to a brick-and-mortar outlet today.  

5.Not being flexible  Once your new business is up and running and you have a loyal customer base, you should have a flexible mindset. Customer needs change over time. That means a need that you’re satisfying today may not be there in two or three years time. And if you don’t have a flexible mindset, your business may collapse. Always keep a sharp eye out on the market and alter your business plan whenever the customer needs change. Keeping a sharp eye out on customer trends will enable you to adjust your business strategy early and remain afloat if the customer needs change.    

While starting a business is an interesting endeavor, failure can bring about heavy losses and depression. So, to be among the 50% of businesses that succeed, you need to be determined and follow the factors outlined above religiously.