As the old joke goes, the only guarantees in life are death and taxes. There are no guarantees for people starting new businesses, realistically some will succeed and some will fail. There are, however, some common mistakes to avoid to maximise the chances that your new business will be a success.
Being aware your own weaknesses
Starting your own business takes a certain degree of confidence, particularly if you are leaving secure employment to go it alone. Confidence implies that you are aware of your strengths and are prepared to believe in yourself and your abilities. That’s all good, but most people have weak points too. It’s part of being human. The smart move is to find someone or a team of people who can help you deal with them, even if that’s just employing freelancers to handle tasks with which you struggle. You may find it helpful to reach out to a business mentor for an honest and objective opinion of your strengths and weaknesses.
Failing to appreciate the importance of a support network
Even if your dream is to be a one (wo)man show, chances are you’re going to need some help at some point. Life happens, people get sick, families have emergencies, homes have power cuts, but your clients are still expecting you to deliver on your promise to them. Having a support network of some sort, be it business partners or just people you can trust to step in when you need them can make all the difference to your business’ success.
Putting ideas before implementation
Ground-breaking innovations, by definition, only come along every once in a while. Even fairly creative new ideas are relatively rare. In either case, the idea is just the start of the process of creating a marketable product or service, while the reality is that some ideas simply come about before there is the technology to make them happen. Fortunately, many businesses succeed by taking an established idea and doing it better than the competition, again it’s all about implementation.
Overestimating the potential market
In very simple terms, with around 6 billion people in the world, there probably is some sort of market for just about any product. For a business to be a long-term success, however, that market has to be able and willing to buy your product or service at a price which will make you a profit. The smaller the market niche is, the more the members thereof have to be willing to pay.
Failing to understand the importance of a viable business model
Successful entrepreneurs need to keep asking the question “how do I make money out of this”? In other words, what is the most appropriate business model for my product or service? Examples of common business models for services include the freemium model, where a limited service is given for free but users pay to access premium features, subscription models and pay-as-you-go-models. There are many more, some of which also apply to product-based businesses. Getting this right can be the crucial difference between success and failure.
Forgetting what cash-flow means
In cold, hard terms, cash is blood. When cash flows freely the business stays healthy. When there is a blockage in the cash flow the business feels the pain. When the cash flow seizes up completely, the business can simply crash to a halt. When creating your business plan, be sure that you are realistic about how long it will take for payments to start coming in. It can be a lot longer than you may, at first, think, particularly in the B2B world. You will also need to be realistic about the danger of some customers simply not paying at all.