As business coaches will attest, many people who start their own business do not realise how much work will be involved in the set-up stage. They fail to carry out any primary research and as a result become quickly overwhelmed. I’m sure you want to avoid this. So perhaps the first question to ask yourself is… whether you’re ready to start your own business.
Do you have an entrepreneurial mindset? Are you committed to spending all the time or capital you need to succeed? And are you ready to take action?
At first, if you don’t have huge startup funds, you’ll have to wear many different hats. You will be the CEO, the general manager, the accountant, the salesperson, the webmaster, IT support and the receptionist! If you thought the entrepreneur lifestyle was all jetting about, looking self-satisfied in a suit, you’d be dead wrong.
You must therefore prepare yourself because there will be days when you are disappointed, depleted, or frustrated. Simply realise that success will not happen overnight. Yes, it may take a year or two before you achieve your expected results.
A surge of motivation can be gained from keeping our big goal and purpose in front of us. A Frost & Sullivan study in Asia-Pacific found that entrepreneurs’ motivating factor to launch a business were very different in Australia compared to other countries. The biggest driver was to “gain control and flexibility”, with 37 per cent saying they were inspired by a better work-life balance, or the opportunity to be their own boss. (Bit.com).
Remember, you can’t take a traditional, localised small business mindset to a leveraged entrepreneur goal.
It just won’t work out; you’ll end up working all the hours as you can’t afford to hire specialists. But cashed-up competitors will work faster to overtake your small steps, plus you can’t be good at every aspect of business.
To avoid disappointment and crushing failure, here are the tips:
How to avoid the 12 Most Common Mistakes New Entrepreneurs Make:
1. Failure to Spend Enough Time Researching the Business Idea to See if it’s Viable
A surprising number of new entrepreneurs have failed because they were not truly interested in the business idea and its “demand gap”. They were more interested in making money. It is important to start something that you really enjoy, something you value, because you will be spending a lot of time on it.
In fact, Embroker says that the main reason tech startups fail is because they misread market demand — this was found in 42% of cases. (CBInsights).
Your assignment – Spend all the time you need working on your business plan, which should include: your mission statement, your business strategy, research on your target market (demographics), industry analysis (size, economics, trends, success factors, challenges, etc.), your marketing plan, your financial projections and sales.
2. Failure to Determine Whether the Business Actually Adds Value
The most sustainable businesses, those that stand the test of time, provide value by performing a service that people need.
Make sure your products or services provide outstanding value and benefit to your clients. Be ready to solve any business problems that potential clients may have in your realm. This doesn’t mean you always sell the same old program but that you listen with both ears for requirements that could be added on.
3. Failure to Gain a Complete Understanding of the Business
Every business has drivers, including key levers; for example, the number of people going on holidays could be a driver in a travel agency. A lever could be long-term customer retention rates. What drivers exist in your business?
Author Mark Hocknell writes that a key challenge all businesses face is managing the system as a synchronised whole, and he says this includes “a clear, singular objective: to deliver value to customers”. (Profit by Design, 2019).
Many business leaders and management consultants would say that success largely depends on attention to detail. Your assignment – understand all the aspects of your business, and especially, know how to present them in an easy and simple manner.
4. Failure to Describe the Business in Only One or Two Sentences
No doubt you’ve experienced the entrepreneur whose business is so technical or complex that he cannot explain the concept in plain English. Or it takes 20 minutes to convey the purpose of the business. What value or benefits does your business offer?
Dave Patten, author of How to Market Your Business, wrote that:
“The manufacturer has paid for the features – the customer pays for the benefits. Or to put it another way, the drill salesperson is not selling bits but more holes.”
Your assignment – Have an efficient 15 and 60 second elevator pitch that introduces you, your business’s mission (reason for being), one of the benefits it provides, and overall something that makes you and your business memorable.
5. Failure to Conduct the Primary Research Necessary
There are many great ideas to latch on to, but the key in business is to make sure the idea—the central mission of your business venture—can attract customers and generate sales and profits. A great idea in and of itself is not enough to start a business.
Your assignment – take the time to gain experience, study the business, understand what makes the business work (how to serve the customers and generate profits) and what leads to losses.
6. Failure to Contact Professionals Who Can Help You Get Started
Numbers of new entrepreneurs ask their friends and family for advice when starting a new business. The problem is, they are nearly always asking people who have never started or run a successful business.
Your assignment – get a mentor or two. Surround yourself with experts who possess skills and expertise that you lack. Team up with professionals, like copywriters, business coaches and accountants, who can complement your strengths and cover for your weaknesses.
7. Failure By Underestimating Financial Requirements
Understanding the numbers of business is important.
Do you know how much capital you need to start your business? Do you know the market, did you calculate your costs, did you project your sales, do you know the number of clients you need to make profitable monthly figures?
Cash flow is crucial too. Do you know how long it will take before you get your first payments… or before you will run out of money? Will suppliers be demanding money up-front but customers take 30 days to pay you?
Your assignment – invest the time to work on ALL aspects, especially the major financial and marketing areas of your business, before you start.
8. Failure to Make Sales & Marketing a Priority
Many new entrepreneurs start their business without determining their target, niche and psychographics first and so have failed to attract any clients. Marketing should be one of your top priorities.
Devising a marketing plan will help you determine how to promote your products or services and create a system that will generate more clients for your business.
Your assignment – dedicate a portion of your week to working on and implementing your marketing plan. Set up a meeting with yourself once a week to work on your marketing and sales plan, and whatever happens never cancel this meeting. It is essential for your business. See marketing planning books here.
9. Failure by Under-budgeting All Marketing Costs
Today the world is overcrowded with businesses and probably some of those in your market perform essentially the same functions as you do. This means that you must differentiate your brand from them by making your business stand out.
Publicity and networking is essential to your livelihood; otherwise you will not attract any clients. I use BX Networking as a way to meet other professionals and the overall investment is around $135 per month (including a breakfast). Free networking events can be hit-and-miss and often chit-chat takes over. You need strategic networking.
So, don’t try to save money on networking or promo materials; they are reflecting your business. A cheap business card will not make a professional impact. A non-existent website will hurt your chances for a follow-up from someone interested in your business whom you met at an event.
Your assignment – make sure you have collateral that reflects the quality of your new brand and business. Provide adequate publicity, lead generation offers, business cards and marketing materials (even LinkedIn banners) that project a professional image.
10. Failure to Focus on the Core Business
Many new entrepreneurs are energetic and enthusiastic people (which is essential to success), but they can also be overly optimistic. They might pursue too many targets and directions at once. This typically gives mediocre results. Define your business’s mission as succinctly and narrowly as possible. When you move in too many directions at once, especially in the early days of your business, you are likely to fail to execute anything correctly! So you end up working “on the business” instead of “in the business”.
In other words, you will spend all your time operating each task on your own. You won’t have the time to sit back and decide on the best way to develop your own marketing plan, create new products, or improve your services.
Your assignment – know your goals. Put them in writing. Make sure they are realistic, specific and measurable, and that you set yourself a deadline to achieve them. Look at them every week.
11. Failure by Scattershot Marketing
Once you have developed your product or service and have perfected your offering, you may think that your offering is the best in your marketplace. But unfortunately, to be efficient you can’t sell to everyone. You need to select a specific target market and stick to it. By doing this, you will have a more effective message and will more likely achieve success much sooner. Dan Kennedy always said “Send the right message to the right customers in the right medium”.
Your assignment – carefully determine your niche, your demography, your ideal clients (your Ideal Client Profile), where they go, what they read, and what aspirations they have, etc. Once you have a full understanding of your client’s profile you will then have a full understanding of how and where to find more of them.
12. Failure to Follow-Up with Clients
Many new entrepreneurs are often so desperate to constantly find new clients and hit their targets that they neglect the clients they already have. This means they end up losing business. This is so crucial that I’ve written a post about fixing follow-up problems.
Statistics show that it takes seven more interactions to secure a new client than to sell more to a repeated client. So develop and maintain a useful, organised follow-up system to offer new services to your clients while also following up leads. Your assignment – regularly and consistently communicate with your current clients in various ways.
Start a newsletter, send a greeting card, offer special sales, create new products that offer higher value, and join affiliate programs that reflect nicely on your business (and pay). People who have already bought from you will appreciate it when you recommend other products.
In fact, it ranges, but up to one out of three clients will take advantage of this new offer. It is essential to build a very, very special relationship with your clients. They are your best audience.
If you have a business idea but are unsure how to get started, then check out my book “How to Start a Freelance Business“, a simple yet informative guide to everything a new freelancer should know when starting a business.
Or if you’ve got big dreams, you might like my thought leader methods in “Power Marketing: An Aussie Guide to Business Growth”. See the books at www.JenniferLancaster.com.au/books. You’ll also get a lot of other ideas and resources to help YOU Start Your Business that will save you lots of time.
Ask Jennifer any question about marketing a business you might have by filling this form below.
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