LAUNCHING
a small business can be risky and success is not always guaranteed.
Businesses are most vulnerable to failure during the early years of
trading, with 20 percent of new businesses folding within their first
year and 50 percent within their first 3 years.
These figures should not scare you off, but should prepare you for some of the challenges entrepreneurs face when starting a business. With hard work and an awareness of the issues, a new business can be a great success.
This piece looks at the most common mistakes new business owners make and, more importantly, how you can avoid them. It also shows you how to improve the chances of your business idea.
Poor or inadequate market research
Research and planning are vital to ensure that your business idea is viable and that your pricing is both competitive in your market place and provides an adequate return.
A common misconception is that entrepreneurs who have failed simply lacked sufficient funding or did not put the right team in place. However, many fail because they have not spent enough time researching their business idea and its viability in the market.
Lack of proper market research is one of the key problems for new businesses. It's easy to get carried away with a business idea and set up a business without testing its viability.
Weak financial planning
Financial planning is extremely important for most new businesses. A lack of capital, lack of a contingency plan and reluctance to seek professional advice can all bring major problems.
It is important to create a high-quality business plan to attract and secure the right type and amount of funding that you need to make your business successful. A business plan can: be used as a tool to structure the financial side of your business and can be updated and changed as your business grows. Keep your expectations grounded for what the business can deliver
Setting sights too high
It is important to make realistic forecasts about your business' potential. During the start-up phase, it can be easy to make over-optimistic forecasts, however there can be serious consequences for your business if your projections are not realistic.
Inaccurate forecasting of market size is a common mistake when starting up. Cash levels can be quickly depleted if you recruit too many people, buy unnecessary equipment or spend too much on business premises. Effective cashflow and income forecasting can help you avoid this.
Inaccurate forecasting is often linked to poor market research, so it is essential to get your research right.
Taking your eye off the competition
During the busy start-up phase it can be easy to forget to set aside enough time to monitor the competition. However, it's essential that you are ready to respond to competitors in your market place and to new developments.
Competition is not just another business that might take money away from you. It can be another product or service that's being developed which you ought to be selling or looking to license before somebody else takes it up.
Poor supplier and customer controls
Common mistakes for new businesses include setting up unsatisfactory credit arrangements and not taking due care when choosing suppliers. Choose carefully as your business' profitability and reputation could be at stake.
Finding a reliable and competitively priced supplier can be vital to the success
These figures should not scare you off, but should prepare you for some of the challenges entrepreneurs face when starting a business. With hard work and an awareness of the issues, a new business can be a great success.
This piece looks at the most common mistakes new business owners make and, more importantly, how you can avoid them. It also shows you how to improve the chances of your business idea.
Poor or inadequate market research
Research and planning are vital to ensure that your business idea is viable and that your pricing is both competitive in your market place and provides an adequate return.
A common misconception is that entrepreneurs who have failed simply lacked sufficient funding or did not put the right team in place. However, many fail because they have not spent enough time researching their business idea and its viability in the market.
Lack of proper market research is one of the key problems for new businesses. It's easy to get carried away with a business idea and set up a business without testing its viability.
Weak financial planning
Financial planning is extremely important for most new businesses. A lack of capital, lack of a contingency plan and reluctance to seek professional advice can all bring major problems.
It is important to create a high-quality business plan to attract and secure the right type and amount of funding that you need to make your business successful. A business plan can: be used as a tool to structure the financial side of your business and can be updated and changed as your business grows. Keep your expectations grounded for what the business can deliver
Setting sights too high
It is important to make realistic forecasts about your business' potential. During the start-up phase, it can be easy to make over-optimistic forecasts, however there can be serious consequences for your business if your projections are not realistic.
Inaccurate forecasting of market size is a common mistake when starting up. Cash levels can be quickly depleted if you recruit too many people, buy unnecessary equipment or spend too much on business premises. Effective cashflow and income forecasting can help you avoid this.
Inaccurate forecasting is often linked to poor market research, so it is essential to get your research right.
Taking your eye off the competition
During the busy start-up phase it can be easy to forget to set aside enough time to monitor the competition. However, it's essential that you are ready to respond to competitors in your market place and to new developments.
Competition is not just another business that might take money away from you. It can be another product or service that's being developed which you ought to be selling or looking to license before somebody else takes it up.
Poor supplier and customer controls
Common mistakes for new businesses include setting up unsatisfactory credit arrangements and not taking due care when choosing suppliers. Choose carefully as your business' profitability and reputation could be at stake.
Finding a reliable and competitively priced supplier can be vital to the success
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