Starting a business is never going to be easy; no less so than in today’s economic climate. According to the Small Businesses Association, a third of all businesses fail within their first two years, with only 44% surviving past the age of four. If however, you have an innovative idea and a passion for what you do; combine this with the knowledge of which classic mistakes to avoid and you could beat the statistics and become a success.
Throwing in all Your Money
Nobody is denying that hard work, patience and a lot of money are required to make a business idea work, especially during the early stages. There can however be a temptation to throw all your own money into your new venture and this should be avoided. Funding may be essential and using some of your own savings can be helpful if you have the extra funds available but you must always remember that you have to be able to survive during the establishment of your business; there is no point having a successful company if you are not earning any money from it and have nothing left to live on.
Not Being Specific
Many new businesses do not last because they fail to make themselves stand out within a crowded market. People need to know why you are unique; what you offer that nobody else does. Telling people you are a tailor is not much use but telling them you are a tailor specialising in women’s vintage clothing makes it clear exactly who you aim to serve. Identifying a niche market and exploiting this untouched potential goldmine can end up being a great earner and helps establish a loyal customer base, reducing the risk of failure.
Accepting too many Extras
We have already mentioned that money will be tight in the early days, so why build up more debt than you need to? Accepting additional cover policies like PPI and raking up expensive credit card bills might seem like a good idea at first but your bank balance will not be thanking you for it later. At times, business must be ruthless and the same is true when it comes to your spending; when you can only afford to buy what you need, only buy what you need.
Exploiting Your Loved Ones
Borrowing money from friends and family can be a great source of low interest finance. It can however, lead to feuds and the loss of those you love as well as your financial backing. Always produce the same formal documentation and never borrow if you do not plan to pay it back. Establishing a business is stressful and you will need your loved ones on your side.
Poor Advertising Techniques
Marketing is crucial to survival but you must advertise in ways that are suitable to your business. After all, why bother placing posters in shop windows that your target audience are never likely to look at? Social networking sites can often be utilised for free and have a broader reach than any other technique. With a global base of over one billion users, well over 35% of entrepreneurs were already using facebook to advertise by 2011; a figure that has only increased.