Research shows that 80 percent of small businesses that have just started out fail within the first 5 years, and this is often because the owners make costly mistakes which wipe out their capital. When you launch your small business, it is important to be mindful of the many pitfalls you’ll encounter, that way you will increase your chances of success. Below are the top mistakes that every business owner should seek to avoid:
Failing to Conduct Market Research
Before you start a business, you should know the market like the back of your hand. You should know yourself, your competitors, how long they’ve been in business, the size of the market, and where the top clients are located. You must identify a niche that your competitors are not filling, and then fill it. Too many entrepreneurs attempt to enter a market that is already saturated. Unless you’re familiar with the market and can introduce a product or service that your competitors aren’t offering, then you should hold onto your capital until you can do so.
Not Understanding the Needs of Your Customers
Too many entrepreneurs focus on what they want, instead of what their customers need. A business owner that understands the needs of their customers, and puts those needs before his own, is a business owner that will succeed. Listen to what your customers are asking of you, and give them what they want, even when it’s inconvenient to do so.
Starting a business requires capital, and if you don’t have enough, you’ll have to find money sources to tap on. Even if you do have the necessary funds, you have to be sure you don’t overspend, as it will take time for the business to grow and begin generating profit. Many businesses fail because after spending money to launch them, the owner doesn’t have enough capital left over to weather the early years until the business begins generating good revenue. Smart entrepreneurs are always prepared to sustain losses during the first few years of their business, and will keep their operating costs as low as possible.
Marketing and Advertising Fails
While it is true that great success can come from word of mouth, remember that this takes time, and new businesses might not have time on their side. Therefore, business owners must figure out ways to cost effectively advertise and market their services. It should also be noted that there is a difference between marketing and advertising. Advertising involves tactics which are used to drive customers to your business within the short term, while marketing is a long term strategy designed to retain those customers while capturing greater market share. Make sure you manage these two areas well.
Inability to Be Flexible Even in A Small Business
Many business owners fail because they are inflexible. Granted, being flexible isn’t easy, and is sometimes inconvenient. But flexibility is one of the key factors that separate the winners from the losers. When your customers see that you’re willing to accommodate their needs, even when it’s inconvenient for you to do so, they will reward you with recurring business.