Common Mistakes When Starting a Business

Posted by on Jun 19, 2013 in Uncategorized

Businesses are most susceptible to failure. In fact, even those ventures that are already existing and operating for quite an extended period of time crash down. How much more those that are yet to establish or are new? Putting up a business is more than just a gambling. Anyhow, what’s good about this is that an entrepreneur can control the outcome or result of the business undertaking unlike in gambling, in most cases. However, the fate of any venture isn’t assured of anything despite any concerted efforts; risk is always present no matter what. Nevertheless, it could be mitigated through awareness and proper preparation.

Lack of Proper Planning and Market Research

Not all businesses flourish and succeed mainly due to several reasons, but among all factors, lack of proper planning and market research is the most common. Planning and conducting a research is the most essential and the first step that must be carried out when starting a business. This is to ascertain the feasibility of a business. The market to be targeted, the location, type of customers, kinds of products and/or inventory, prices, suppliers and a lot more must be taken into account. Most businesses fail because they fall short of considering all these essential issues.

Planning must be performed over a considerable period of time. Nevertheless, most business aspirants do not delve so much on this as it translates to expending resources or maybe to some extent, there is lack of adequate funding.

Without proper planning, precise and realistic market information can never be obtained and/or achieved. As a result, forecasts may be incorrectly formulated, which would spell disaster for the upcoming business endeavor. Moreover, it is important to consider the customer base. Failing to obtain feedback and/or comments, about the products and/or services to be offered, from the customers themselves could be fatal. Generally, most business establishments, that have failed, neglect this important aspect.

Monopolizing Business Ideas

In addition to lack of proper planning and market research, monopolizing business ideas is also thought to be a huge mistake in starting a business. As the saying goes, “two heads are always better than one”. This is essentially true for putting up a business, which is a lesson that the Carousel Halifax has learned. Some entrepreneurs have a habit of keeping their business ideas within themselves with a fear that those ideas may be exploited by others. Because of this, significant feedbacks and comments from other shrewd and trusted individuals may never be heard. Ideally, brainstorming is very crucial. Needless to emphasize, establishing a culture where sharing of ideas is encouraged must be promulgated in starting up a business, and as it continues.

Post written by Jose Gerard, head writer at his real estate website and father of his two children. He lives in Memphis, Tennessee and runs his website at www.kdmailing.com.

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Improper Financial Planning

Posted by on Jun 11, 2013 in Uncategorized

Financial planning is one of the most important functions, if not the most significant one, in establishing a business. Some establishments fail to fulfill this though. Managing a capital is the determinant factor of whether a business shall succeed or otherwise. Stated differently, having adequate capital is vital for every business, but administering and handling the capital properly is equally important.

Financial forecast must be carried out prior to establishing a business, and this includes budgeting and directing the finances of the business only to key elements. Investments must be made to projects where high return and less risk is expected. Moreover, it must be taken into account that expenditures must be sensibly made. Further, cash flow management must be considered accordingly when starting a business, that is to ensure that cash and/or resources are available whenever needed.

Short of Contingency Strategy

Having no contingency plan leads a business to unanticipated severe problems. Engaging into a business (let’s say, a Florida fishing company) would mean dealing with the unexpected. After all, not all things can be controlled, such as changes in market prices, political chaos, natural calamities which may devastate and/or ruin the operations of a business. It is important that a business shall still be able to keep afloat when profits and/or sales are unfavorable. Preparing for the unforeseen is very critical otherwise, it may mean the end of a business.

Overlooking Competition

It is true that competition does always exist regardless of the circumstances. Business operations require so much attention that business entrepreneurs tend to forget observing and addressing competition, as a result businesses are dragged by it. It is imperative that competition is well taken into account prior to establishing a business. An aspirant needs to know where his/her planned business would stand amidst vast competition.

Competition is a main threat to any business more so, to a newly established venture, like this company selling beer coasters. Apparently, this must be managed accordingly. How? Improve and/or intensify any marketing campaign. Introduce unique advertising and promotion schemes in the form of distributing flyers, posters, marketing through online and the like. In addition, expand one’s network. This is a fine way of spreading out a customer base.

Improper Asset Management

Mostly, those newly established ventures that have failed, fell short of managing their assets. Technically, pouring so much investments and loans on fixed assets may eventually lead to capital cost being tied up needlessly, when there are other important aspects to consider investing into. Needless to point out, there must be a striking balance of maintaining too much assets.

To avoid overspending on fixed assets, a business venture may consider leasing the same for use in operations, instead of making sumptuous cash outlays in buying them. Anyhow, there should be an assessment of benefits between two alternatives nevertheless. Should it be more cost-efficient to rent than to buy, then lease those needed items. Otherwise, consider purchasing those essential items for the business to use in the long run.

Lack of Cost Management Schemes

One of the signs that a business is no longer operating soundly is that when costs outweigh the revenues earned over a considerable period of time. In a business standpoint, this symptom is always apparent. Nevertheless, some businesses do not necessarily act on this. As a result, those businesses fail.

One of the best ways to counteract a spiteful rise in costs is to manage the same by employing cost cutting measures. This is a very practical approach but nonetheless, businesses fail to consider this.

Should these common mistakes are taken into account accordingly, and that proper actions are carried out to address them, there is certainly a good chance that business failure may be averted, in one way or another.

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Dream Big, Work Small!

Posted by on May 19, 2013 in Uncategorized

Everybody would like to dream big and own their own corporation; however, it is not news to people that a lot of businesses fail in their first year. In fact, about 5 out of ten of startup businesses are doomed to not last after four years into their respective industries.

The website statisticsbrain.com mentioned incompetence as the leading cause of a business failure. Why is that? Here are the reasons that will cause any startup to be not competent enough to expand, and then eventually fail.

Incorrect Pricing

Some call it emotional pricing, or putting a price on a product or service based on initial judgment, without putting enough effort on market research. While a business owner can be an expert on a how a product works, insufficient or overpricing is definitely among the pitfalls of many businesses. How can this be avoided? Prices should be planned according to market research, existing capital, and other resources. If you cannot do the pricing on your own, hire someone else to do it.

Hiring the Wrong People

Let’s face it – when you consider putting up a business, you initially dream of a nice family setup that will involve everyone who does not have a job among your family or friends. While this might paint a great family picture, businesses are far from being endearing. Hiring people according to who are close to you, and not according to the needed skill-set, spells trouble in the end. Keep in mind that when you hire people, do it according to their resume.

Not Enough Funding

A lot of budding business owners put out whatever money they have in their pockets or meager bank accounts and hope that capital will grow from meager seed money. If you were in the medical field, a medical assistant salary may not be sufficient to reach startup funds for a new business. While there is a possibility that that seed money can grow a money tree, that possibility varies from one business story to another. If the empire that you are planning to build rests on getting supplies and entails a lot of labor, consider other sources for your funding.

Wrong Reasons for Starting

When you start a business, it is very important to think about your reasons on why you do not want to have a 9 to 5 desk job and get regular income. Consider why are you willing to take the risk of putting up a business. A lot of people who dived into this risk without thinking of what will make them swim right after they take the plunge found their business drowning in the sea of the unmotivated. Remember that your reasons will say a lot about how you are willing to invest your money and dedicate long hours of doing your product and thinking about how to move forward.

The Unfortunate Location

Unless you are doing an online business, location will mean a lot to your shop. If you are building a brick-and-mortar establishment, you must not expect that people are willing to go to a remote area. However, there are a lot of starting business owners that fall for low rent, which makes them forget about the value of strategic location.

No Business Plan

Simply put, any business that does not have a business plan is absurd. A business plan tells everything that the management and the employees need to know – how much money expected to be made, how much time needed to get back the capital, how many people should work at a given time, and more. Without an effective business plan, any enterprise is a ship without a sail, floating without aim until it decides to fail and sink on its own. If you’re planning to have your own business, do not start without it.

Underestimating the Competition

Pride, as they say, is a deadly sin. True enough, pride caused a lot of business deaths, thanks to the habit of undermining the opponents in the industry. No matter how good a product or service is, it is not entirely impossible that its creator is the only one thinking of that product, as is the case with Ploughcroft. Any entrepreneur that is foolhardy enough to think that he is the only store open to dish up his goods will neglect looking at ways to find his own niche. To prevent this, entrepreneurs must constantly look at competition trends in his given industry and continuously innovate. At the same time, it is very important to know who the players are in the industry, and if needed, know how to deal with the competition by making some friends.

Not Believing in Delegation

Some entrepreneurs think they got it all. The deadly combination of skill and capital leads them to think that they have all the avenues to create everything that is good for their business. Big mistake – this lack of willingness to delegate work entails a lot of resources and time thinking of executive things to be done wasted.

If you are a businessperson, it is not your job to do the logo, marketing plan, and human resources activities at the same time. It will not mean that you are not knowledgeable in these things, but there are other people you ought to hire, because they make better judgment. At the same time, delegation splits up the work, making it more efficient and less costly to do. You can just imagine that logo being done in two days or less, instead of you spending an entire week poring over what you think is art.

Ineffective Marketing

A lot of businesses fail because they do not know how to sell their products to the people that are willing to buy them. There is nothing wrong with the product altogether – it is just because people do not know that it is out there. Or even if they do, they find it not appealing because of the entire packaging or advertisement. Thanks to technology, this can easily be done through efficient online marketing, search engine optimization, social media, and the like. You can still try out the tri-media (newspapers, TV, and radio). Study your market and advertising trends before you start with any advertisement and know how people can respond to you positively.

Thanks to Greg Hasselman for this post. His website can be found at bestbadcreditloans-review.com and he can be emailed at g.hasselman@gmail.com.

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