People are starting their own businesses. Whether from necessity, because they have just lost their job, or choice, to gain more income, start-ups are on the increase. However, statistics show that the majority of start-ups won't last 5 years. There are many reasons for this failure rate, but here are 5 reasons for failure that you can avoid:
Don't assume everyone wants or needs your product/service
Small business owners are often in love with their product or service. They can't see why everyone else isn't thrilled by their idea also. Look at the big picture: realize that what you offer is not for everyone. Don't waste time trying to sell ice to Eskimos. Instead, define your specific target market from the beginning, and sell only to them. The key is to focus on and target only those people that would want or need your solution to their problem. This avoids wasting money on advertising and marketing to people that are not really interested in your product
Small business owners are often in love with their product or service. They can't see why everyone else isn't thrilled by their idea also. Look at the big picture: realize that what you offer is not for everyone. Don't waste time trying to sell ice to Eskimos. Instead, define your specific target market from the beginning, and sell only to them. The key is to focus on and target only those people that would want or need your solution to their problem. This avoids wasting money on advertising and marketing to people that are not really interested in your product
Don't use shotgun marketing
'Shotgun marketing" means putting a lot of stuff on the market, hoping that some of it will resonate with your customer and they will buy. The same idea is expressed as 'throwing stuff against a wall and seeing what sticks.' This is wasteful and inefficient, and may turn away potential customers.
'Shotgun marketing" means putting a lot of stuff on the market, hoping that some of it will resonate with your customer and they will buy. The same idea is expressed as 'throwing stuff against a wall and seeing what sticks.' This is wasteful and inefficient, and may turn away potential customers.
Make a marketing business plan and stick to it. Know your customer, like stated in the paragraph above. Know what products they will need and use. Promote only those items. Instead of a shotgun approach, think of this as a high-powered rife with a scope.
Change your marketing business plan only when necessary, not at every whim or new idea that comes along. If something doesn't seem to work, try another approach, but don't stray too far from your core business. As an extreme example, if you are selling dog training tools, you could sell other dog products, but don't sell gardening products to the same market.
Don't be "penny wise and pound foolish"
You have to have some discipline in your spending. Money will disappear fast in any business. Keep a tight rein on expenses; know the return for what you spend, and prioritize accordingly. Don't buy the 'latest and greatest' gizmo just because it makes you look cool. But, on the other hand, don't refuse to spend any money to build your business. You need to invest money to grow money. Find a middle ground. Others can help by giving their opinions on whether something is worth spending on or not.
You have to have some discipline in your spending. Money will disappear fast in any business. Keep a tight rein on expenses; know the return for what you spend, and prioritize accordingly. Don't buy the 'latest and greatest' gizmo just because it makes you look cool. But, on the other hand, don't refuse to spend any money to build your business. You need to invest money to grow money. Find a middle ground. Others can help by giving their opinions on whether something is worth spending on or not.
Don't devalue people
People drive your business, not contracts. Business is based on relationships, and the relationships lead to contracts and business. A good relationship can lead to good referrals and more business. But sometimes things go wrong in a business, and then you need to decide whether to follow the contract, or be flexible in order to save a business relationship.
People drive your business, not contracts. Business is based on relationships, and the relationships lead to contracts and business. A good relationship can lead to good referrals and more business. But sometimes things go wrong in a business, and then you need to decide whether to follow the contract, or be flexible in order to save a business relationship.
Sometimes, for legitimate reasons, a contract won't be honored or fulfilled. While a contract is good and necessary, the relationship you have with your business partner is what is most valuable. You need to evaluate on a case-by-case basis what to do in each situation.
Don't be a late adopter of technology
Technology evolves and changes every day. Your customers keep up with the technology, and will notice if you don't. But, don't be a first-adopter; this can get you burned in the marketplace if you choose the wrong technology. Wait on the technology until it matures, prices go down and the early bugs are worked out before you adopt it. Examples of today's new technology are social media marketing, web 2.0 products, mobile apps and QR codes.
Technology evolves and changes every day. Your customers keep up with the technology, and will notice if you don't. But, don't be a first-adopter; this can get you burned in the marketplace if you choose the wrong technology. Wait on the technology until it matures, prices go down and the early bugs are worked out before you adopt it. Examples of today's new technology are social media marketing, web 2.0 products, mobile apps and QR codes.
There are many minefields on the path to small business success, and that path is littered with the wrecks of promising start-ups. But by being aware of, and avoiding these start-up mistakes, you can increase the chances of your business succeeding and growing like you expect it to.
